Heat pumps provide comfortable heating by extracting heat from a source and transferring it to the building. In theory, heat can be extracted from any source, no matter how cold, but a warmer source allows higher efficiency. A ground source heat pump uses the shallow ground as a source of heat, thus taking advantage of its seasonally moderate temperatures.

In the summer, the process can be reversed so the heat pump extracts heat from the building and transfers it to the ground. Transferring heat to a cooler space takes less energy, so the cooling efficiency of the heat pump will gain benefits from the lower ground temperatures.

Shallow horizontal heat exchangers experience seasonal temperature cycles due to solar gains and transmission losses to ambient air at ground level. These temperature cycles lag behind the seasons because of thermal inertia, so the heat exchanger can harvest heat deposited by the sun several months earlier. Deep vertical systems rely heavily on migration of heat from surrounding geology, unless they are recharged annually by exhaust heat from air conditioning.

Ground source heat pumps must have a heat exchanger in contact with the ground or groundwater to extract or dissipate heat. This component accounts for a third to a half of the total system cost. Several major design options are available for these, which are classified by fluid and layout. Direct exchange systems circulate refrigerant underground, closed loop systems use a mixture of anti-freeze and water, and open loop systems use natural groundwater.

The Direct exchange geothermal heat pump is the oldest type of geothermal heat pump technology. It is also the simplest and easiest to understand. The ground-coupling is achieved through a single loop circulating refrigerant in direct thermal contact with the ground (as opposed to a combination of a refrigerant loop and a water loop). The refrigerant leaves the heat pump appliance cabinet, circulates through a loop of copper tube buried underground, and exchanges heat with the ground before returning to the pump. The name "direct exchange" refers to heat transfer between the refrigerant and the ground without the use of an intermediate fluid. There is no direct interaction between the fluid and the earth; only heat transfer through the pipe wall. Direct exchange heat pumps are not to be confused with "water-source heat pumps" or "water loop heat pumps" since there is no water in the ground loop. The term ground-coupled heat pump encompass' closed loop and direct exchange systems, while excluding open loops.

Direct exchange systems are significantly more efficient and have potentially lower installation costs than closed loop water systems. Copper's high thermal conductivity contributes to the higher efficiency of the system, but heat flow is predominantly limited by the thermal conductivity of the ground, not the pipe. The main reasons for the higher efficiency are the elimination of the water pump (which uses electricity), the elimination of the water heat exchanger (which is a source of heat losses), and most importantly, the latent heat phase change of the refrigerant in the ground itself.

While they require much more refrigerant and their tubing is more expensive per foot, a direct exchange loop is shorter than a closed water loop for a given capacity. A direct exchange system requires only 15 to 30% of the length of tubing and half the diameter of drilled holes, and the drilling or excavation costs are therefore lower. Refrigerant loops are less tolerant of leaks than water loops because gas can leak out through smaller imperfections. This dictates the use of brazed copper tubing, even though the pressures are similar to water loops. The copper loop must be protected from corrosion in acidic soil through the use of a sacrificial anode or cathodic protection.

Most installed systems have two loops on the ground side: the primary refrigerant loop is contained in the appliance cabinet where it exchanges heat with a secondary water loop that is buried underground. The secondary loop is typically made of High-density polyethylene pipe and contains a mixture of water and anti-freeze (propylene glycol, denatured alcohol or methanol). After leaving the internal heat exchanger, the water flows through the secondary loop outside the building to exchange heat with the ground before returning. The secondary loop is placed below the frost line where the temperature is more stable, or preferably submerged in a body of water if available. Systems in wet ground or in water are generally more efficient than drier ground loops since it is less work to move heat in and out of water than solids in sand or soil. If the ground is naturally dry, soaker hoses may be buried with the ground loop to keep it wet.

An installed liquid pump pack Closed loop systems need a heat exchanger between the refrigerant loop and the water loop, and pumps in both loops. Some manufacturers have a separate ground loop fluid pump pack, while some integrate the pumping and valving within the heat pump. Expansion tanks and pressure relief valves may be installed on the heated fluid side. Closed loop systems have lower efficiency than direct exchange systems, so they require longer and larger pipe to be placed in the ground, increasing excavation costs.

Closed loop tubing can be installed horizontally as a loop field in trenches or vertically as a series of long U-shapes in wells. The size of the loop field depends on the soil type and moisture content, the average ground temperature and the heat loss and or gain characteristics of the building being conditioned. A rough approximation of the initial soil temperature is the average daily temperature for the region.

A vertical closed loop field is composed of pipes that run vertically in the ground. A hole is bored in the ground, typically 75 to 500 feet (23–150 m) deep. Pipe pairs in the hole are joined with a U-shaped cross connector at the bottom of the hole. The borehole is commonly filled with a bentonite grout surrounding the pipe to provide a thermal connection to the surrounding soil or rock to improve the heat transfer. Thermally enhanced grouts are available to improve this heat transfer. Grout also protects the ground water from contamination, and prevents artesian wells from flooding the property. Vertical loop fields are typically used when there is a limited area of land available. Bore holes are spaced at least 5–6 m apart and the depth depends on ground and building characteristics. For example, a detached house needing 10 kW (3 ton) of heating capacity might need three boreholes 80 to 110 m (260 to 360 ft) deep. (A ton of heat is 12,000 British thermal units per hour (BTU/h) or 3.5 kilowatts.) During the cooling season, the local temperature rise in the bore field is influenced most by the moisture travel in the soil. Reliable heat transfer models have been developed through sample bore holes as well as other tests.

A horizontal closed loop field is composed of pipes that run horizontally in the ground. A long horizontal trench, deeper than the frost line (6FT minimum), is dug and U-shaped or slinky coils are placed horizontally inside the same trench. Excavation for horizontal loop fields is about half the cost of vertical drilling, so this is the most common layout used wherever there is adequate land available. For example, a detached house needing 10 kW (3 ton) of heating capacity might need 3 loops 120 to 180 m (390 to 590 ft) long of NPS 3/4 or NPS 1.25 polyethylene tubing at a depth of 1 to 2 m (3.3 to 6.6 ft).

A slinky (also called coiled) closed loop field is a type of horizontal closed loop where the pipes overlay each other. The easiest way of picturing a slinky field is to imagine holding a slinky on the top and bottom with your hands and then move your hands in opposite directions. Rather than using straight pipe, slinky coils, use overlapped loops of piping laid out horizontally along the bottom of a wide trench. Depending on soil, climate and your heat pump's run fraction, slinky coil trenches can be anywhere from one third to two thirds shorter than traditional horizontal loop trenches. Slinky coil ground loops are essentially a more economic and space efficient version of a horizontal ground loop.

As an alternative to trenching, loops may be laid by mini horizontal directional drilling. (mini-HDD) This technique can lay piping under yards, driveways, gardens or other structures without disturbing them, with a cost between those of trenching and vertical drilling. This system also differs from horizontal & vertical drilling as the loops are installed from one central chamber, further reducing the ground space needed. Radial drilling is often installed retrospectively (after the property has been built) due to the small nature of the equipment used and the ability to bore beneath existing constructions.

A closed pond loop is not common because it depends on proximity to a body of water, where an open loop system is usually preferable. A pond loop may be advantageous where poor water quality precludes an open loop, or where the system heat load is small. A pond loop consists of coils of pipe similar to a slinky loop attached to a frame and located at the bottom of an appropriately sized pond or water source.

A standing column well system is a specialized type of open loop system. Water is drawn from the bottom of a deep rock well, passed through a heat pump, and returned to the top of the well, where traveling downwards it exchanges heat with the surrounding bedrock. The choice of a standing column well system is often dictated where there is near-surface bedrock and limited surface area is available. A standing column is typically not suitable in locations where the geology is mostly clay, silt, or sand. If bedrock is deeper than 200 feet (61 m) from the surface, the cost of casing to seal off the overburden may become prohibitive.

A multiple standing column well system can support a large structure in an urban or rural application. The standing column well method is also popular in residential and small commercial applications. This type of ground source system has some heat storage benefits, where heat is rejected from the building and the temperature of the well is raised, within reason, during the summer cooling months which can then be harvested for heating in the winter months, thereby increasing the efficiency of the heat pump system. As with closed loop systems, sizing of the standing column system is critical in reference to the heat loss and gain of the existing building. As the heat exchange is actually within the bedrock, using water as the transfer medium, a large amount of production capacity (water flow from the well) is not required for a standing column system to work. However, if there is adequate water production, then the thermal capacity of the well system can be enhanced by discharging a small percentage of system flow during the peak summer and winter months.