A geothermal heat pump or ground source heat pump (GSHP) is a central heating and/or cooling system that transfers heat to or from the ground.
It uses the earth as a heat source (in the winter) or a heat sink (in the summer). This design takes advantage of the moderate temperatures in the ground to boost efficiency and reduce the operational costs of heating and cooling systems, and may be combined with solar heating to form a geosolar system with even greater efficiency. Ground source heat pumps are also known as "geothermal heat pumps" although, strictly, the heat does not come primarily from the centre of the Earth, but from the Sun. They are also known by other names, including geoexchange, earth-coupled, earth energy systems. The engineering and scientific communities prefer the terms "geoexchange" or "ground source heat pumps" to avoid confusion with traditional geothermal power, which uses a high temperature heat source to generate electricity. Ground source heat pumps harvest heat absorbed at the Earth's surface from solar energy. The temperature in the ground below 6 metres (20 ft) is roughly equal to the mean annual air temperature  at that latitude at the surface.
Depending on latitude, the temperature beneath the upper 6 metres (20 ft) of Earth's surface maintains a nearly constant temperature between 10 and 16 °C (50 and 60 °F), if the temperature is undisturbed by the presence of a heat pump. Like a refrigerator or air conditioner, these systems use a heat pump to force the transfer of heat from the ground. Heat pumps can transfer heat from a cool space to a warm space, against the natural direction of flow, or they can enhance the natural flow of heat from a warm area to a cool one. The core of the heat pump is a loop of refrigerant pumped through a vapor-compression refrigeration cycle that moves heat. Air-source heat pumps are typically more efficient at heating than pure electric heaters, even when extracting heat from cold winter air, although efficiencies begin dropping significantly as outside air temperatures drop below 5 °C (41 °F). A ground source heat pump exchanges heat with the ground. This is much more energy-efficient because underground temperatures are more stable than air temperatures through the year. Seasonal variations drop off with depth and disappear below 7 metres (23 ft) to 12 metres (39 ft) due to thermal inertia. Like a cave, the shallow ground temperature is warmer than the air above during the winter and cooler than the air in the summer. A ground source heat pump extracts ground heat in the winter (for heating) and transfers heat back into the ground in the summer (for cooling). Some systems are designed to operate in one mode only, heating or cooling, depending on climate.
Geothermal pump systems reach fairly high Coefficient of performance (CoP), 3 to 6, on the coldest of winter nights, compared to 1.75-2.5 for air-source heat pumps on cool days. Ground source heat pumps (GSHPs) are among the most energy efficient technologies for providing HVAC and water heating.
Setup costs are higher than for conventional systems, but the difference is usually returned in energy savings in 3 to 10 years, and even shorter lengths of time with federal, state and utility tax credits and incentives. Geothermal heat pump systems are reasonably warranted by manufacturers, and their working life is estimated at 25 years for inside components and 50+ years for the ground loop. As of 2004, there are over a million units installed worldwide providing 12 GW of thermal capacity, with an annual growth rate of 10%.