Quick answer
A geothermal heat pump, or ground-source heat pump, is a heating and cooling system that moves heat between a building and the ground through fluid-filled pipes buried in the earth or set in water, using the ground’s steady temperature instead of outdoor air as its heat source and heat sink.
Because soil a few feet down stays far milder than winter or summer air, the system works with a smaller temperature lift and higher efficiency than an air-source heat pump.
Quick facts
The key facts about Geothermal Heat Pump, with sources:
- Also called
- Ground-source heat pump (GSHP), geoexchange
- Ground temperature
- Fairly constant; US average about 55°F (about 42°F Boston, 72°F Orlando) 1
- Loop types
- Horizontal, vertical, pond/lake (closed); open loop (well water) 1
- Vertical bores
- About 4 in. wide, 100–400 ft deep, about 20 ft apart 1
- Estimated life
- About 25 years indoor parts; 50+ years for the ground loop 1
- Federal 25D credit (10 Oct 2026)
- Not available for property placed in service after 31 Dec 2025 3
Key takeaways
- A geothermal heat pump uses buried or submerged loops to swap heat with the ground, which stays near 55°F on average across the US 1.
- The ground loop is the big decision: horizontal, vertical, pond or open loop, each with different land and water needs 1.
- ENERGY STAR sets minimum EER and COP by loop type; a closed-loop water-to-air unit needs EER 17.1 and COP 3.6 2.
- The federal 25D tax credit is not available for systems placed in service after 31 December 2025 3. Do not plan a 2026 install around it.
- PNNL estimates about 25 years for indoor parts and 50 or more for the loop 1.
What a geothermal heat pump is
Every heat pump moves heat rather than making it. An air-source heat pump trades heat with outdoor air. A geothermal heat pump trades heat with the ground. In winter it pulls heat from the earth; in summer it pushes heat from the house into it.
The ground is a better partner than air because its temperature barely changes. PNNL’s Building America guide puts the US average at about 55°F year round, ranging from about 42°F around Boston to about 72°F around Orlando 1. That means less work for the compressor on the coldest and hottest days.
The system has three parts: the ground loop, the heat pump unit indoors, and the delivery system, usually ducts (water-to-air) or radiant floors (water-to-water). ENERGY STAR rates each type separately 2.
How heat moves in winter
- Water or antifreeze solution circulates through the buried loop → picks up ground heat
- Loop fluid enters the indoor heat pump → heat passes to the refrigerant
- Compressor raises refrigerant temperature → heat goes to air or water for the house
- Cooled loop fluid returns to the ground → warms again
- In summer the cycle reverses → house heat goes into the ground
Ground loop types compared
| Loop type | How it is built | Best fit | Main trade-off |
|---|---|---|---|
| Horizontal (closed) | Pipe in trenches at least 4 ft deep | Homes with plenty of land | Needs the most yard area |
| Vertical (closed) | Bores about 4 in. wide, 100–400 ft deep, about 20 ft apart | Small lots, shallow soil over rock | Drilling adds cost and permits |
| Pond or lake (closed) | Coils sunk at least 8 ft below the surface | Sites with a suitable water body | Needs enough water depth and volume |
| Open loop | Well or surface water pumped through the unit and returned | Ample, clean groundwater | Higher pumping energy; water quality and local rules |
| Standing column / hybrid | Deep well open loop, or loop plus outdoor air | Special sites or large loads | More complex design |
Geothermal vs other heat pumps and a furnace
| System | Heat source | Efficiency rating | Cold-weather behavior |
|---|---|---|---|
| Geothermal | Ground or water | EER and COP (ENERGY STAR by loop) 2 | Steady; ground stays mild |
| Air-source heat pump | Outdoor air | SEER2, HSPF2 | Output and COP fall as air cools |
| Cold-climate heat pump | Outdoor air | HSPF2 plus COP at 5°F | Holds 70% of capacity at 5°F (ENERGY STAR) |
| Dual fuel | Air plus gas | HSPF2 plus AFUE | Gas takes over in deep cold |
| Gas furnace | Burning gas | AFUE | Unaffected by outdoor temperature |
Example: checking a geothermal unit against ENERGY STAR
A quote lists a two-stage closed-loop water-to-air unit rated EER 22.0 and COP 4.2 at full capacity, and EER 27.0 and COP 4.6 at part load (example ratings). ENERGY STAR lets multi-stage models use the average of the highest and lowest capacity ratings 2.
| Test | ENERGY STAR minimum (closed loop, water-to-air) | Average of full and part load | Pass? |
|---|---|---|---|
| EER | 17.1 | (22.0 + 27.0) ÷ 2 = 24.5 | Yes |
| COP | 3.6 | (4.2 + 4.6) ÷ 2 = 4.4 | Yes |
| Same unit on an open loop | EER 21.1, COP 4.1 | Needs open-loop ratings from the maker | Check separately |
What the COP means for a bill: a home needing 40 million BTU of heat uses about 11,723 kWh with resistance heat (COP 1).
At a seasonal COP of 3.6 that falls to about 3,256 kWh; at 2.2, a federal-floor air-source heat pump’s seasonal average, about 5,333 kWh.
At the US average of 18.31 cents per kWh for July 2026 4, that is about $596 against $976 for the year.
Rated COP excludes some loop pump energy, so real results run a little lower. Try your numbers in the heat pump savings calculator.
Where geothermal shows up
- In quotes as "ground-source," "geo" or "water-to-air heat pump," with a separate loop line item.
- In ENERGY STAR listings by loop type 2.
- In local permits for drilling or wells; rules vary by state and county.
- In utility programs that fund ground loops or offer heat pump rates.
- In water heating: some units have a desuperheater that preheats domestic hot water.
Sources: [5]
Benefits and drawbacks
Benefits
Drawbacks
- Loop installation needs land, drilling or water access.
- Higher upfront cost than air-source systems.
- Fewer installers with ground-loop experience.
- A poorly sized loop can lose efficiency over years.
What can go wrong
The loop must be sized for the home’s load and the soil. An undersized loop slowly cools the ground around it in winter, lowering entering water temperature and efficiency. Loop design uses ground thermal properties that vary by site, which is why some installers run a test bore.
Open loops depend on water quality and quantity; minerals or iron can foul heat exchangers. And like any system, ducts and install quality still matter.
Cost drivers, lifespan and incentives
The ground loop is usually the largest cost: loop type, drilling depth, soil and rock, site access and permits. Indoor equipment, ducts or radiant work and electrical upgrades add the rest.
PNNL estimates about 25 years for indoor components and 50 or more for the loop 1, so a later replacement may reuse the loop.
Federal 25D status on 10 October 2026: the IRS says the Residential Clean Energy Credit "is not available for any property placed in service after December 31, 2025" 3.
Do not count on a federal credit for a 2026 install. Check the federal tax credit page and heat pump rebates for current state and utility offers.
How a geothermal system is installed
- Load calculation with Manual J; equipment selected with Manual S using expanded performance data, not just factory ratings 1.
- Site survey for loop type, soil or rock, water and access.
- Permits for drilling, wells or trenching where required.
- Loop installed and pressure tested; header brought into the house.
- Loop flushed and purged of air; antifreeze added if used.
- Indoor unit set, ducts or radiant connected, system commissioned.
PNNL notes that IGSHPA accredits ground-source installers 1. Refrigerant work requires EPA Section 608 certification.
Maintenance
- Change the air filter on schedule 6.
- Have loop pressure, flow and antifreeze (if used) checked by a technician.
- For open loops, watch for scaling or fouling of the heat exchanger.
- Annual check of the indoor unit, as with any heat pump 6.
Sources: [6]
Warning signs
- Falling heating output over several winters: possible undersized loop.
- Loop pressure loss: possible leak in the ground or header.
- High-pressure or low-flow lockouts.
- Water or antifreeze at the indoor header.
- Call a geothermal-experienced technician; do not open loop or refrigerant lines.
Standards, criteria and incentive rules
ENERGY STAR geothermal criteria, effective 1 January 2012, set minimum EER and COP by type: closed-loop water-to-air 17.1/3.6; open-loop water-to-air 21.1/4.1; closed-loop water-to-water 16.1/3.1; open-loop water-to-water 20.1/3.5; direct geoexchange (DGX) 16.0/3.6 2.
IRS 25D: geothermal heat pumps had to meet ENERGY STAR requirements in effect at purchase, and the credit is not available for property placed in service after 31 December 2025 3. Drilling, well and water discharge rules are set by states and counties.
Geothermal misconceptions
- Myth Geothermal means volcanic heat.
- Reality Home systems use shallow ground at near-constant temperature, not hot springs.
- Myth It only works in warm climates.
- Reality The ground stays mild in cold climates too; that is the point 1.
- Myth You need a big yard.
- Reality Vertical loops fit small lots 1.
- Myth There is a 30% federal credit in 2026.
- Reality 25D does not apply to property placed in service after 2025 3.
Ground temperature and climate
Ground temperature follows climate: about 42°F near Boston and about 72°F near Orlando, per PNNL 1. Cold-winter states such as Ohio and Washington gain most on heating; hot states such as Texas and Florida gain on cooling. Drilling rules and rebates vary by state.
Is geothermal right for you?
Geothermal fits best when you plan to stay a long time, have room or rock suitable for a loop, and face high heating or cooling loads. A cold-climate air-source heat pump may get much of the efficiency for less upfront cost on a small lot.
Next step: compare against air-source and gas options with the heat pump vs furnace tool and the heat pump vs gas furnace cost page.
Questions about Geothermal Heat Pump
How does a geothermal heat pump work?
It circulates water or an antifreeze solution through pipes buried in the ground or sunk in a pond. In winter the fluid picks up ground heat and the heat pump concentrates it for your home. In summer it reverses, moving house heat into the ground. The ground stays near 55°F on average across the US.
What are the types of geothermal loops?
There are four main types. Horizontal loops run in trenches at least 4 feet deep. Vertical loops use bores 100 to 400 feet deep. Pond or lake loops sit at least 8 feet underwater. Open loops pump well or surface water through the unit and return it. Land, soil and water decide which fits.
Is there a federal tax credit for geothermal in 2026?
No. The IRS says the Residential Clean Energy Credit (25D) is not available for property placed in service after 31 December 2025. Systems placed in service from 2022 through 2025 could qualify if they met ENERGY STAR. Check state and utility programs for current incentives.
How long does a geothermal system last?
PNNL’s Building America guide estimates about 25 years for the indoor components and 50 years or more for the ground loop. That means a future equipment replacement can often reuse the existing loop, if it was sized and installed correctly.
How efficient is a geothermal heat pump?
ENERGY STAR requires a closed-loop water-to-air unit to reach at least EER 17.1 for cooling and COP 3.6 for heating. Open-loop units need EER 21.1 and COP 4.1. Real seasonal efficiency depends on loop design and pump energy, so it can run a little below rated figures.
Does geothermal work in cold climates?
Yes. Because ground temperature stays fairly constant, a geothermal system does not lose capacity in cold snaps the way air-source units can. Ground temperatures are lower in cold regions, such as about 42°F near Boston, so the loop is sized for that.
Can geothermal heat water too?
Many units include a desuperheater, which uses some waste heat to preheat domestic hot water, mainly when the system is cooling. Some water-to-water units can supply hot water directly. Ask the installer what your model supports.
What is the difference between open and closed loop geothermal?
A closed loop circulates the same fluid through sealed pipes in the ground or a pond. An open loop pumps groundwater or surface water through the heat pump and returns it to the ground or surface. Open loops need ample clean water and local approval, and they use more pump energy.
Sources
- PNNL, Building America Solution Center: Ground Source Heat Pumps, retrieved .
- ENERGY STAR, Geothermal Heat Pumps key product criteria (effective 1 January 2012), retrieved .
- IRS, Residential Clean Energy Credit (25D), retrieved .
- U.S. EIA, Electric Power Monthly, Table 5.6.A Average price of electricity by state, July 2026 and 2025, retrieved .
- ENERGY STAR, Geothermal Heat Pumps product page, retrieved .
- ENERGY STAR, Maintenance Checklist for heating and cooling, retrieved .
Expert review
Written by the HyreHVAC Research team. Not yet reviewed by an outside expert. We say so rather than imply a review that has not happened; see our editorial policy.
How the numbers were checked: Loop types, ground temperatures and lifespans from PNNL’s Building America guide; criteria from ENERGY STAR’s geothermal criteria page [esGeoHome]; 25D status quoted from the IRS page on 10 October 2026; electricity price from EIA. The rating example uses labelled hypothetical figures.
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