Ground source heat pumps use the stable temperature of the earth, typically between 40°F and 70°F year-round, to heat and cool buildings. They work for single-family homes, large commercial buildings, university campuses, and even entire city districts. The system moves heat between the ground and your living space through a buried loop of pipes, providing heating in winter, cooling in summer, and often domestic hot water as well.
How the System Works
A few feet below the surface, the ground stays at a relatively constant temperature regardless of the season. Ground source heat pumps exploit this by circulating antifreeze fluid through a buried pipe loop, absorbing that low-grade heat and concentrating it to warm your home. The process runs on the same refrigeration cycle as your kitchen fridge, just in reverse.
In winter, the antifreeze fluid in the ground loop absorbs warmth from the soil and carries it indoors. At a heat exchanger, that warmth transfers to a separate refrigerant loop without the two fluids ever mixing. The refrigerant then passes through a compressor, which pressurizes it and raises its temperature significantly. A second heat exchanger transfers that concentrated heat into your home’s distribution system, whether that’s ductwork, radiators, or underfloor piping. The refrigerant then passes through an expansion device that makes it very cold again, cold enough to absorb more warmth from the ground loop, and the cycle repeats.
In summer, a reversing valve flips the direction of heat flow. The system pulls warmth out of your home and dumps it into the ground, effectively turning the earth into a heat sink. This makes the same equipment handle both heating and cooling with no separate air conditioner required.
Types of Ground Loops
The buried pipe network is the most distinctive part of the system, and there are several ways to install it depending on your property.
Horizontal Loops
Horizontal systems run trenches across a wide area of land, typically 6 to 10 feet deep and hundreds of feet long. They’re the most affordable to install because the trenching is straightforward. The tradeoff is space: you need a sizable yard. Horizontal loops also tend to be slightly less efficient than vertical ones because soil temperature and moisture fluctuate more near the surface with the seasons.
Vertical Loops
When space is limited or you want minimal disruption to landscaping, vertical systems use one or more boreholes drilled 200 to 500 feet into the ground. Deeper soil temperatures are more stable, so vertical loops deliver better thermal performance. Installation costs have come down in recent years thanks to improved drilling technology and better data on local geology, making vertical systems increasingly common for both residential and commercial projects.
Pond and Lake Loops
If you have a large enough body of water nearby, coils of pipe can be submerged in it instead of buried in the ground. In cold climates, the loops need to sit at least eight feet below the surface to avoid freezing. This option avoids excavation entirely, which can make it one of the least expensive configurations when conditions allow.
Large commercial buildings and schools often default to vertical systems because the land area needed for horizontal loops would be impractical. All three configurations work for both residential and commercial applications.
Heating, Cooling, and Hot Water
Most homeowners install a ground source heat pump to replace both a furnace and an air conditioner. The same unit handles both jobs. Many systems can also be equipped with a device that captures waste heat from the cooling cycle to preheat your domestic hot water, reducing your water heating costs as a bonus.
How the heat gets distributed inside your home matters for efficiency. Underfloor heating is the ideal pairing because it only needs water heated to about 35°C (95°F), which a heat pump produces very efficiently. Standard radiators require water at 60°C to 70°C (140°F to 158°F), which forces the heat pump to work harder. Low-temperature radiators split the difference, operating at 45°C or less while still warming a room effectively. Fan coils are another option that runs well at low flow temperatures. Connecting your heat pump to a single type of distribution system, rather than mixing different types, keeps efficiency high and installation simpler.
When a heating specialist evaluates your home, they’ll look at your insulation levels, radiator sizing, the heat pump’s capacity, and your home’s layout to determine the best distribution approach. Well-insulated homes get the most out of a ground source system because the heat pump doesn’t need to produce as high a temperature to keep rooms comfortable.
Efficiency Compared to Other Heating
Ground source heat pumps are dramatically more efficient than combustion-based heating because they move existing heat rather than creating it by burning fuel. Their efficiency is measured by a coefficient of performance (COP), which tells you how many units of heat you get for each unit of electricity consumed. A COP of 3.6, the ENERGY STAR minimum for closed-loop systems, means you get 3.6 units of heating for every 1 unit of electricity. A gas furnace, by comparison, tops out below 1.0 because it can never extract more energy than the fuel contains.
Open-loop systems, which draw from and return water to a well or aquifer, achieve even higher minimums: a COP of 4.1 for heating and an energy efficiency ratio of 21.1 for cooling. In practice, these numbers translate to energy cost reductions of up to 50% compared to conventional systems.
Environmental Impact
Because no fuel burns inside a ground source heat pump, it produces zero direct emissions at the building. The only carbon footprint comes from the electricity powering the compressor and pumps, and that footprint shrinks as the electrical grid gets cleaner.
RMI analyzed geothermal heat pump emissions across three Midwest utility territories and found they produce roughly 85% fewer emissions than a gas furnace and 90% fewer than a propane furnace through 2050. Even in regions where the grid still relies partly on fossil fuels, the efficiency advantage is large enough to deliver major carbon savings from day one.
Large-Scale and District Use
Ground source heat pumps aren’t limited to individual buildings. Some of the most ambitious applications serve entire campuses and city districts.
Ball State University in Indiana built the largest closed-loop district geothermal system in the country, heating and cooling 47 buildings while shutting down its aging coal-fired boilers. The project saves the university an estimated $2 million per year and created roughly 2,300 direct and indirect jobs during development. Boise, Idaho, operates the largest municipally owned geothermal heating utility in the U.S., with over 20 miles of pipeline warming more than six million square feet of building space, including City Hall, the local YMCA, and a public recreation pool.
Klamath Falls, Oregon, has run a geothermal district system since the early 1990s, now serving 23 commercial, nonprofit, and government facilities. One notable feature: geothermal sidewalk and bridge snow-melt systems that keep surfaces clear in winter without salt or plows. Universities like Brown and Notre Dame have adopted similar systems, and Washington, D.C.’s Barry Farm Redevelopment is building the city’s first comprehensive community heat pump system to serve residential apartments and retail spaces. Projects in Framingham, Massachusetts, Ann Arbor, Michigan, Austin, Texas, and New York City demonstrate that district-scale geothermal works across a wide range of climates and building types.
Cost and Tax Credits
The upfront cost of a ground source heat pump is higher than a conventional furnace and air conditioner combination, primarily because of the ground loop installation. Vertical drilling is the most expensive component, while horizontal trenching costs less but requires more land. Over time, the lower operating costs, often 50% less than conventional systems, offset the installation premium, with most homeowners seeing payback within several years depending on local energy prices and the system they’re replacing.
The federal Residential Clean Energy Credit currently covers 30% of the cost of a new geothermal heat pump system, including equipment and installation. This credit applies to systems installed from 2022 through December 31, 2032, with the percentage stepping down in later years. Many states and utilities offer additional rebates on top of the federal credit, which can significantly reduce the net cost.