Recently, there are lots of interests for utilizing waste heat in the industrial site. The heat pump can recover waste energy in forms of low temperature heat source. High temperature steam is a useful resource for chemical processes such as refinement and extraction. Therefore researchers try to generate steam by utilizing low temperature waste heat. In this study, 100 kW thermal heat pump system has been installed to generate steam by using R245fa as a refrigerant. The internal heat exchanger is used for improving system performance and reliability of the compressor. About 60-90 ºC water is used for low temperature heat source for evaporator about and 110-120 ºC steam is generated. The pressurized water is heated by condenser and expanded at the flash tank where the steam generates. This research focuses on the influence of internal heat exchanger on the COP and heating capacity of the heat pump. The influence of the operating conditions such as degree of superheat, heat source temperature and operating conditions are also investigated. It is found that the size of the heat exchanger, insulation of the main components and the operating condition of the heat pump and flash tank affect the system performance significantly.