This study evaluates the techno-economics of replacing an air-source heat pump (ASHP) system with a solar seasonal thermal energy storage (STES) system for space heating in Hangzhou, China. Three heating systems, solar STES, ASHP, and ASHP with short-term storage of solar energy, are developed using TRNSYS for a house with 240 m² of floor area. The ratio of tank volume to collector area (RVA) of the STES is optimized for the lowest equivalent annual cost over a lifespan of 20 y. The determined optimal RVA is 0.33 m³/m², although it depends on the system and electricity prices. The optimized STES reduces the electricity demand to 1,269 kWh (74% reduction). Despite the superior energy performance, the economic benefit is only possible with large STES systems, which enjoy low tank prices due to scale effects. The results suggest that policy support is needed for STES, where district scaling is not an option.