Geothermal heat pumps (GHPs), sometimes referred to as GeoExchange, earth-coupled, ground-source, or water-source heat pumps, have been in use since the late 1940s. They use the constant temperature of the earth as the exchange medium instead of the outside air temperature. This allows the system to reach fairly high efficiencies (300% to 600%) on the coldest winter nights, compared to 175% to 250% for air-source heat pumps on cool days.
Although 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 at a relatively constant temperature. Depending on latitude, ground temperatures range from 45°F (7°C) to 75°F (21°C). Like a cave, this ground temperature is warmer than the air above it during the winter and cooler than the air in the summer. The GHP takes advantage of this by exchanging heat with the earth through a ground heat exchanger.
As with any heat pump, geothermal and water-source 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 air-source heat pumps, they are quieter, last longer, need little maintenance, and do not depend on the temperature of the outside air. [Energy.Gov]