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A geothermal, or ground-source, heat pump uses electricity to move heat rather than burn fuel. In winter it draws heat from the relatively stable shallow ground and transfers it indoors; in summer it reverses the process, sending indoor heat into the ground.
A complete installation combines an underground heat exchanger, the heat-pump unit, indoor air or hydronic distribution, and controls. The loop design, equipment size, property layout, local energy prices and incentives determine whether it is a practical choice for a particular building.
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The basic idea: move heat instead of making it
Heat naturally moves from warmer areas to cooler ones. A heat pump uses electricity to drive that movement in a useful direction. A geothermal system exchanges heat with soil, groundwater or surface water through an underground loop, while the indoor heat pump transfers that energy to or from the building.
At roughly 30 feet below grade, shallow-earth temperatures stay comparatively steady through the year—about 50°F to 59°F (10°C to 15°C) according to the U.S. Department of Energy (DOE). In many U.S. locations, that ground is warmer than winter air and cooler than summer air, so it provides a steadier heat source and heat sink than outdoor air. See the DOE overview at Geothermal Heat Pumps.
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DOE describes the process as moving heat “from the ground to a building (or from a building to the ground).” The direction changes with the season, but the equipment is the same reversible heat-transfer system.
What happens in heating and cooling mode
Winter heating cycle
- Heat enters the ground loop. A water-based or antifreeze-based fluid circulates through buried or submerged piping and absorbs heat from the surrounding soil or water.
- The heat pump extracts and concentrates that heat. The electrically driven unit removes heat from the ground-side fluid and raises it to a temperature suitable for the building.
- Heat moves indoors. The building-side heat exchanger transfers the energy to air for ductwork or to water for a hydronic system.
- The loop returns underground. After giving up heat, the cooler loop fluid circulates back through the ground exchanger to repeat the cycle.
Summer cooling cycle
- Indoor heat is collected. The system removes heat from indoor air or circulating water.
- Heat is rejected outdoors through the loop. The heat pump sends that energy into the ground-side circuit.
- The earth absorbs the heat. Soil or groundwater takes in the transferred heat, and the cooled loop fluid returns to the equipment.
Because the cycle is reversible, one geothermal heat pump can provide both heating and cooling. Some designs also recover heat for domestic hot water, although that feature depends on the equipment and system design.
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1. Ground heat exchanger
The ground heat exchanger is the network or arrangement that transfers energy between the building and the earth or water. It may use connected pipes buried in soil, vertical boreholes, or submerged piping. The exchanger is sized and configured for the site’s geology, available land, heating and cooling loads, and local regulations.
2. Heat-pump unit
The indoor heat pump connects the ground-side circuit to the building-side circuit. It uses electricity to extract, concentrate and deliver heat in winter, then reverses direction for cooling. Equipment can be configured for air delivery or water-based distribution.
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3. Distribution, controls and optional storage
Ductwork commonly distributes conditioned air. Water-to-water equipment can feed radiant floors, radiators or other hydronic emitters. Thermostats, pumps, valves and controls coordinate loop flow and indoor comfort. A complete installation may also include thermal storage or domestic-hot-water components.
ENERGY STAR’s geothermal criteria distinguish water-to-air and water-to-water equipment, closed and open loops, and direct geoexchange configurations. These labels describe different system designs, not interchangeable names for one standard installation.
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Loop configurations: horizontal, vertical, closed and open
The loop choice is a site decision rather than a universal ranking. A qualified designer evaluates land, drilling access, soil or rock, groundwater, water quality, building loads and permitting requirements.
| Configuration | How it exchanges heat | Typical decision considerations |
|---|---|---|
| Horizontal closed loop | Pipes are laid in trenches and permanently filled with circulating fluid. | Requires sufficient accessible land and excavation; trenching can be practical on larger sites. |
| Vertical closed loop | Pipes run down boreholes and return to the heat pump in a sealed circuit. | Uses less surface area but requires drilling and appropriate access, geology and permits. |
| Submerged closed loop | Sealed piping is placed in a suitable pond or other surface-water body. | Depends on an appropriate water body, environmental constraints and approvals. |
| Open loop | Groundwater or another larger water source flows through the system and is discharged or returned. | Requires adequate water quantity and quality plus compliance with water-use and discharge rules. |
In a closed loop, the heat-transfer fluid remains inside permanently contained piping. An open loop uses water from a larger environment. ENERGY STAR’s definitions and product categories are available at its key product criteria page.
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Geothermal versus air-source heat pumps
An air-source heat pump exchanges heat with outdoor air. A geothermal system exchanges heat with the ground or groundwater. Outdoor-air temperatures can swing widely, while shallow ground temperatures change much less over the seasons. That difference can make geothermal operation more consistent in climates with very hot summers or cold winters.
| Factor | Geothermal (ground-source) | Air-source |
|---|---|---|
| Heat source or sink | Ground, groundwater or surface water through an underground or submerged exchanger | Outdoor air through an exterior coil |
| Seasonal temperature exposure | Uses relatively stable shallow-ground temperatures | Directly exposed to outdoor-air extremes |
| Installation | Requires loop excavation, drilling or water-body work in addition to indoor equipment | Generally needs outdoor and indoor equipment without a ground loop |
| Upfront cost | Typically higher; DOE says installation can cost several times that of an air-source system with the same capacity | Typically lower initial installation cost |
| Noise and service life | DOE says geothermal systems are generally quieter, last longer and need less maintenance than air-source systems | Outdoor equipment is exposed to weather and may require more maintenance over time |
| Best choice | Depends on site feasibility, equipment, energy prices, incentives and design quality | Depends on the same project-specific factors, with simpler site work often an advantage |
Neither technology is automatically best for every property. A comparison should use the same design heating and cooling capacity, operating assumptions and incentive rules rather than relying on a generic price or savings claim.
Efficiency, savings, cost and lifespan
Published efficiency criteria
ENERGY STAR publishes minimum efficiency thresholds by geothermal category. For example, its criteria table lists closed-loop water-to-air equipment at an energy-efficiency ratio (EER) of 17.1 and a coefficient of performance (COP) of 3.6. The page states that the listed requirements became effective January 1, 2012; confirm the live specification before treating those figures as current purchasing requirements: ENERGY STAR geothermal criteria.
Energy-use and payback estimates
On its geothermal product page, accessed October 13, 2026, ENERGY STAR reports that certified geothermal heat pumps use 61% less energy than a standard model and estimates nearly $830 in annual savings and more than $9,500 over 15 years. Those are broad program-page comparisons, not a guarantee for a particular house, climate, tariff or installation. The page is at ENERGY STAR Geothermal Heat Pumps.
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DOE’s Energy Saver estimates that the additional geothermal installation cost may be recovered through energy savings in about five to 10 years, depending on energy costs and local incentives. DOE also estimates service life of up to 24 years for indoor components and more than 50 years for the ground loop. Read the qualifications at Heat Pump Systems.
Why there is no universal installed price
Ground work, drilling, loop length, soil conditions, water access, building size, distribution changes and electrical work can vary dramatically. DOE states that the initial installation price can be several times that of an air-source system with the same heating and cooling capacity. A credible proposal should show the loop design, equipment capacity, expected efficiency, excavation or drilling scope, distribution work, controls, permits and maintenance assumptions instead of presenting one national price.
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Check the site before choosing equipment
- Available space and access: Determine whether trenching, drilling equipment or water-body access is feasible without damaging structures, trees or utilities.
- Ground and water conditions: Soil, rock, groundwater temperature, water quality and legal restrictions affect loop type and sizing.
- Building loads: Heating and cooling calculations should reflect insulation, windows, air leakage, occupancy and future changes rather than simply matching the old furnace or air conditioner.
- Distribution compatibility: Existing ducts may need sealing or modification; a hydronic design requires compatible emitters and controls.
- Permits and environmental rules: Drilling, excavation, groundwater use and discharge may require local or state approvals.
Compare proposals on more than the heat-pump label
Ask each qualified contractor to document loop configuration, design temperatures, equipment staging, rated EER and COP, indoor distribution, domestic-hot-water provisions if offered, electrical requirements, warranty terms, maintenance access and expected operating assumptions. ENERGY STAR advises quality installation, home sealing, duct sealing where applicable and regular equipment maintenance.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Typical installation process
- Load and site assessment: A qualified designer evaluates the building, soil or water conditions, available area, utility locations and intended heating, cooling and hot-water uses.
- Loop selection and design: The team chooses horizontal, vertical, submerged, open or closed configuration and calculates the required exchanger capacity.
- Permitting and utility coordination: Required building, drilling, water-use or environmental permits are identified before construction.
- Ground work: Trenches, boreholes or submerged piping are installed, then pressure-tested and connected to the indoor equipment.
- Equipment and distribution work: The heat pump, pumps, controls, ducts or hydronic connections are installed and commissioned.
- Balancing and handover: The contractor verifies flow, temperatures, controls, electrical operation and safety devices, then provides operating and maintenance instructions.
DOE’s contractor guidance is summarized in Tax Credits, Incentives, and Technical Assistance for Geothermal Heat Pumps. The professional’s role is important because loop sizing and permitting cannot be determined from the building’s address alone.
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Maintenance and common problems
Ground loops are protected underground and generally require little routine attention once correctly installed. The indoor equipment and distribution system still need ordinary heat-pump care: keep filters and air paths clear, inspect ductwork or hydronic components, check pumps and controls, and schedule service according to the manufacturer’s instructions.
If heating or cooling is weak
- Check thermostat mode, setpoint and scheduling.
- Inspect filters, registers and return-air paths for blockage.
- Confirm that loop and distribution pumps are operating and that no control fault is displayed.
- Have a qualified technician check fluid flow, temperatures, refrigerant-side operation and system balance rather than repeatedly adjusting the thermostat.
If energy use is higher than expected
- Verify that the building envelope and ducts are sealed; air leakage can overwhelm an efficient heat pump.
- Compare actual operating hours and utility rates with the assumptions in the design proposal.
- Check whether auxiliary electric heat is running more often than intended.
- Request commissioning data and measured loop temperatures from the installer.
Do not open a sealed ground loop, alter antifreeze concentration or change electrical wiring without qualified service. A leak, pump failure or control fault can affect both comfort and equipment safety.
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Financial incentives change by jurisdiction and date. DOE reports that the One Big Beautiful Bill Act (P.L. 119-21), enacted July 4, 2025, revised dates and provisions in the Internal Revenue Code affecting some tax credits. That notice does not establish an individual homeowner’s eligibility or current rebate amount.
Before signing a contract, verify current federal, state, utility and local programs directly with the relevant authority, and confirm whether eligibility depends on equipment certification, installation date, labor, building type or income. Use DOE’s current information at its geothermal incentives page.
When geothermal is a strong candidate
A geothermal heat pump merits detailed design when the property can accommodate a properly sized loop, the owner expects to remain long enough to benefit from lower operating costs, and local energy prices or incentives support the higher initial investment. It can be especially attractive where quiet operation, long ground-loop life, combined heating and cooling, or limited outdoor-equipment space are priorities.
An air-source system may be more practical when drilling or trenching is constrained, the project must minimize initial cost, or the building will not be occupied long enough for potential savings to offset the added ground work. The correct answer comes from a site-specific comparison of design, cost, operating assumptions and permitting—not from the technology name alone.
Quick Recap
Key takeaways
- The ground loop supplies heat in winter and absorbs building heat in summer.
- The complete system includes a ground exchanger, electrically driven heat pump, distribution equipment and controls.
- Horizontal, vertical, submerged, open and closed-loop designs serve different sites.
- Geothermal equipment typically costs more to install than air-source equipment but may offer quieter operation, longer life and lower energy use.
- Published savings, payback and efficiency figures are estimates or program criteria; actual results depend on climate, building, rates, incentives and installation quality.
- A qualified professional should assess the site, design the loop, confirm permits and commission the system.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
