Residential and commercial geothermal systems use the constant temperature of the earth (about 55-60 degrees) as a heat-exchange source.  These systems use a ground heat-exchange fluid such as water or freon, to heat and cool buildings and heat water.

Geothermal heat pump systems consist of basically three parts: the ground heat exchanger, the heat pump unit, and the air delivery system (ductwork). The heat exchanger is basically a system of pipes called a ‘loop,’ which is buried in the shallow ground near the building. A fluid (usually water or a mixture of water and antifreeze) circulates through the pipes to absorb or relinquish heat within the ground.  In the winter, the heat pump removes heat from the heat exchanger and pumps it into the indoor air delivery system. In the summer, the process is reversed, and the heat pump moves heat from the indoor air into the heat exchanger.

Utility-scale geothermal systems use energy drawn directly from hot parts of the Earth’s interior which happen to be close enough to the surface to use in this way.  This heat can be drawn from several sources: hot water or steam reservoirs deep in the earth that are accessed by drilling; geothermal reservoirs located near the earth's surface; and the shallow ground near the Earth's surface.