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Geothermal heat pumps are similar to ordinary heat pumps, but use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. Because they use the earth's natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.

Geothermal Heat Pump: A geothermal heat pump (as shown in Figure 1) uses the thermal energy of the ground or groundwater as the heat source and heat sink for residential space heating and/or cooling. It may provide both space heating and cooling, cooling only or heating only functions.

A geothermal heat pump consists of one or more factory-made assemblies that normally include an indoor conditioning coil with air moving means, compressor(s) and refrigerant to fluid heat exchanger(s).  In addition, some or all of the domestic water heating shall be provided through the use of a desuperheater, integrated demand water heater or a separately installed compressor that provides demand water heating.

Figure 1 - Geothermal heat pump

The geothermal heat pump includes all the equipment and connections from the point at which the ground heat exchanger enters the house, except for indoor equipment that was installed by someone not representing the manufacturer or manufacturer's representative, such as the ground heat exchanger installer.

Closed Loop System: A ground heat exchanger in which the heat transfer fluid is permanently contained in a closed system.

Open Loop System: A ground heat exchanger in which the heat transfer fluid is part of a larger environment. The most common open loop systems use ground water or surface water as the heat transfer medium.

Direct Expansion (DX): A geothermal heat pump system in which the refrigerant is circulated in pipes buried in the ground, rather than using a heat transfer fluid, such as water or antifreeze solution in a separate closed loop, and fluid to refrigerant heat exchanger. A DX system includes all of the equipment both inside and outside the house. DX systems may be single or multi-speed.

Integrated Demand Water Heating: This term is used to describe geothermal heat pumps that include a water heating function in the refrigeration cycle. Integrated demand water heating differs from the super-heater in that the integrated demand water heating model provides all or nearly all of the domestic hot water needs and provides hot water even when space conditioning is not required. This includes systems that employ the use of a separate water heating compressor unit or that use the same compressor for space conditioning and water heating. Also sometimes referred to as full-demand or demand water heating.