How Geothermal Heat Pumps Work 

Using a heat exchanger, a geothermal heat pump can move heat from one space 

to another. In summer, the geothermal heat pump extracts heat from a building 

and transfers it to the ground for cooling. In winter, the geothermal heat pump 

takes natural heat from the ground and transfers it to the home or building for 

heating. 

Installing a geothermal heat pump system can be the most cost-effective and 

energy-efficient home heating and cooling option. Geothermal heat pumps are 

a particularly good option if you are building a new home or planning a major 

renovation to an existing home by replacing, for example, an HVAC system. 

Geothermal vs. Air-Source Heat Pumps

While geothermal heat pumps operate similarly to the far more common 

air-source heat pump (ASHP), geothermal heat pumps are substantially more 

energy-efficient than even ASHPs because they take advantage of the relatively 

consistent ground temperatures, which are far more uniform than air temperatures. Geothermal systems can reduce energy consumption by approximately 

25% to 50% compared to air source heat pump systems. Geothermal heat 

pumps reach high efficiencies (300%-600%) on the coldest of winter nights. 

As with any heat pump, geothermal heat pumps are able to heat, cool, and, if so 

equipped, supply the house with hot water. Some models of geothermal systems 

are available with two-speed compressors and variable fans for more comfort 

and energy savings. Relative to ASHPs, they are quieter, last longer, need little 

maintenance, and do not depend on the temperature of the outside air.

Guide to 

Geothermal Heat 

Pumps 

Geothermal heat pumps are 

among the most efficient 

and comfortable heating 

and cooling technologies 

available because they use 

the earth’s natural heat to 

provide heating, cooling, and 

often, water heating. 

About Geothermal Heat 

Pumps

While many parts of the country 

experience seasonal temperature 

extremes – from scorching heat 

in the summer to sub-zero cold in 

the winter – a few feet below the 

earth’s surface the ground remains a 

relatively constant temperature. The 

natural ground temperature is cooler 

than the natural air temperature in 

summer, and warmer than the natural 

air temperature in winter. While the 

margin of variation is small, seasonal 

changes in ground temperature give 

geothermal heat pumps a dependable 

and permanent wintertime heat source 

and summertime heat sink. 

Geothermal heat pumps, also known 

as ground source heat pumps, geoexchange, water-source, earth-coupled, 

and earth energy heat pumps, take 

advantage of this resource and 

represent one of the most efficient 

and durable options on the market to 

heat and cool your home.

Many heating, ventilation, and air 

conditioning systems use some sort of 

heat pump for heating and cooling.

Geothermal heat pump systems, consisting of the heat exchanger (left) and the heat pump (right), heat and 

cool a home by transferring heat to and from the earth.

iStockphoto #’s 117086265 and 12333446

continued >
A dual-source heat pump combines an 

ASHP with a geothermal heat pump. 

These appliances simultaneously 

provide the consumer with a more 

efficient alternative to the ASHP, and 

a more affordable alternative to the 

geothermal heat pump. Dual-source 

heat pumps have higher efficiency 

ratings than air-source units, but are 

not as efficient as geothermal units. 

The main advantage of dual-source 

systems is that they cost much less to 

install than a single geothermal unit, 

and work almost as well.

Types of Geothermal Heat 

Pumps

Geothermal heat pumps come in 

four types of loop systems that loop 

the heat to or from the ground and 

your house. Three of these – horizontal, vertical, and pond/lake – are 

closed-loop systems. The fourth type 

of system is the open-loop option. 

Choosing the one that is best for 

your site depends on the climate, soil 

conditions, available land, and local 

installation costs at the site. 

Closed-Loop Systems

•	 Horizontal: This type of installation is generally most cost-effective 

for residential installations, 

particularly for new construction 

where sufficient land is available. It 

requires trenches at least four feet 

deep.

•	 Vertical: This is often used for 

larger scale geothermal systems 

(such as in commercial buildings) 

where land is limited, or where 

the soil is too shallow to bury the 

horizontal loops in the trenches 

and some form of drilling into the 

bedrock is necessary. Vertical loop 

systems can be more expensive, but 

they use less land and also minimize disturbance to the existing 

landscape. 

•	 Pond/Lake: If the site has an 

adequate water body, this may be 

the least expensive option. A supply 

line pipe runs underground from 

the building to the water and coils 

into circles at least eight feet under 

the surface to prevent freezing. The 

coils should only be placed in a 

water source that meets minimum 

volume, depth, and quality criteria. 

Open-Loop System

This type of system uses well or surface body water as the heat exchange 

fluid that circulates directly through 

the geothermal heat pump system. 

Once it has circulated through the 

system, the water returns to the 

ground through the well, a recharge 

well, or surface discharge. This option is practical only with an adequate 

supply of relatively clean water, and 

if all local codes and regulations 

regarding groundwater discharge are 

met.

Energy-Efficient and CostEffective 

Although installing a geothermal heat 

pump system is more expensive than 

installing an air source system of the 

same heating and cooling capacity, 

you can recoup the additional costs 

in energy savings in 5 to 10 years. 

An average geothermal heat pump 

system costs about $2,500 per ton of 

capacity. If a home requires a 3-ton 

unit, then it would cost about $7,500 

(plus installation and drilling costs). 

A comparable ASHP system with 

air conditioning would cost about 

$4,000, but the energy costs could 

easily equate to the extra cost of 

installing a geothermal heat pump. 

Additionally, geothermal heat pump 

systems installed in new or existing 

homes by Dec. 31, 2016 are eligible 

for a 30% federal tax credit. See the 

Financial Incentives box for more 

information.

Geothermal heat pump systems have 

an average 20+ year life expectancy 

for the heat pump itself and 25 to 50 

years for the underground infrastructure. Additionally, they move between 

three and five times the energy they 

consume between a building’s interior 

space and the ground. 

To determine the energy efficiency 

of a geothermal heat pump, look for: 

the Energy Efficiency Ratio (EER), 

and the Coefficient of Performance 

(COP). The cooling capacity is 

indicated by the EER while the 

heating capacity is indicated by the 

COP. To find current ENERGY STAR 

requirements and ratings, please see 

the ENERGY STAR link below.

Further Resources 

DOE Energy Savers: Geothermal Heat 

Pumps 

www.energysavers.gov/

geothermal_heat_pumps

Energy 101: Geothermal Heat Pumps 

www.eere.energy.gov/multimedia/

video_geothermal_heat_pumps.html

EERE Information Center

1-877-EERE-INFO (1-877-337-3463)

www.energysavers.gov

Printed with a renewable-source ink on paper containing 

at least 50% wastepaper, including 10% post consumer waste.

DOE/EE-0385 • February 2011

Financial Incentives

Tax credits, incentives, and rebates may be 

available in your area. Please visit 

www.energysavers.gov/taxcredits for more 

information.