The basic elements of a geothermal heat pump (GHP) system include a:
Ground loop — system of fluid-filled plastic pipes buried in the shallow ground, or placed in a body of water, near the building
Heat pump — removes heat from the fluid in the pipes, concentrates it, and transfers it to the building (for cooling, this process is reversed)
Air delivery system — conventional ductwork used to distribute heated or cooled air throughout the building.
Simply put, a GHP works much like the refrigerator in your kitchen, with the addition of a few extra valves that allow heat-exchange fluid to follow two different paths: one for heating and one for cooling. The GHP takes heat from a warm area and exchanges the heat to a cooler area, and vice versa. The beauty of such a system is that it can be used for both heating and cooling—doing away with the need for separate furnace and air-conditioning systems—and for free hot water heating during the summer months.
Geothermal heat pumps use electricity to heat and cool, just like a conventional heat pump. However, unlike a conventional heat pump, GHPs use the relatively constant temperature of the shallow Earth as a source of heat in the winter and as a repository for heat in the summer.
In the winter, the fluid passing through the underground (or underwater) loops of piping is warmed by the Earth’s heat. The collected heat is extracted and concentrated by the heat pump, and distributed through the building’s ductwork.
To cool the building in the summer, this process is reversed — the heat pump moves heat from the indoor air into the underground loops, where it is transferred to the relatively cooler ground. The heat removed from the indoor air during the summer can also be used to produce some of your hot water, or to heat swimming pools, instead of transferring it to the ground.
To view a video of how geothermal heat pumps work, click the picture below:
(Information from geothermal-resource)