This paper presents a dynamic model of a variable speed heat pump (VSHP) in a commercial building that responds to direct load control (DLC) signals, updated every 4 s, for the improvement of grid frequency regulation (GFR). The model is simplified for real-time simulation studies with the time horizon ranging from seconds to hours, but still sufficiently comprehensive to analyze the operational characteristics such as the heat rate and coefficient of performance. A variable speed drive-controlled induction motor model is also established for the adjustment of the VSHP input power. A dynamic model of an experimental room is then developed to estimate the effect of the DLC application to the VSHP on its indoor air temperature for two different cooling systems. Furthermore, small signal analysis is performed to evaluate both the transient response of the DLC-enabled VSHP and its contribution to GFR. Finally, with an isolated microgrid implemented with Matlab/Simulink, simulation studies demonstrate that the VSHP can be effectively exploited as the DLC-enabled load while still ensuring building occupant comfort and long-term device performance.