GSHPs harness the free stored heat in the ground that is generated by solar energy and replenished daily by the sun and moisture. The relatively stable temperature of the ground, at depths below 1m, means that this geothermal energy is available all year round, even during the most severe weather.

GSHPs operate on essentially the same principles as a domestic fridge with the ground temperature being around 10ºC, the same as the inside of a fridge, and underfloor heating running at roughly 40ºC, the same as the warm grille found at the back of all fridges.

In practice, GSHPs push a cold fluid (usually a mixture of water and antifreeze and around 5ºC colder than the ground temperature) out into a network of buried plastic pipes. As the fluid passes through the pipes it gradually absorbs heat energy from the surrounding environment. Consequently, when the fluid returns to the heat pump it is slightly warmer (around 5ºC) than it left.

The heat pump then upgrades this heat to a higher level to provide heating - the higher it raises the temperature, the less efficient the heat pump, the more electrical energy and the larger the heat pump required. Consequently, heat pumps are best suited to low temperature distribution systems in low-energy buildings where they only have to raise the temperature to 30 to 35ºC. This is why GSHP are not best suited to use with domestic radiators.

As the liquid in the collector pipes passes through the heat pump it causes liquid refrigerant to turn to vapour (the refrigerant liquid has a boiling point well below 0ºC) in the evaporator. This vapour is then compressed which further raises its temperature before passing into a condenser where it condenses, like steam on a window. Water coming from the house heating circuit absorbs the heat on the other side of the condenser whilst the cooled refrigerant, now back in liquid form, returns to the bottom of the evaporator and the whole process is repeated.

In the case of a dry system the flow of water coming from the house is replaced with a flow of air. The diagram alongside shows a heat pump operating a wet system:
  
The key to an efficient GSHP system is the design of the collector - a large quantity of plastic piping filled with a chilled water solution in the ground. This “heat collector” can be designed to utilise the area available and optimise the heat collected. Although shallow, horizontal, collectors are the easiest and least costly method where space is restricted, vertical heat exchangers can be used.