Geothermal heating and cooling (Ground Source Heat Pump) is still a refrigerated gas reverse cycle air conditioner. It still has a gas circuit , fan coil and compressor. But the difference being is that instead of a fan unit for the compressor being exposed to extremes of heat and cold air, a water coil is attached to the compressor and a water supply is exposed to more stable temperatures by being run through pipes underground. Think about it this way, in cooling mode a compressor works less hard when it is exposed to say 22 deg Celsius from the ground instead of 38 deg Celsius of air. In heating it will work easier when exposed to a ground temperature of say 18 deg Celsius instead of a cold night air of 2 deg Celsius. Hence the power efficiency, it doesn't work as hard.

In summer the refrigeration circuit of the air conditioning takes the heat out via a water loop that is run under the ground instead of the outside air. The ground temperature depending on depth can be from 18-25 degrees Celsius in summer while the outside air can be from 28-40 degrees Celsius.

This is while cool air is being circulated in the home. The compressor doesn't work as hard.

In winter the refrigeration circuit of the air conditioning takes the cold out via a water loop that is run under the ground instead of the outside air. The ground temperature depending on depth can be from 11-18 degrees Celsius in summer while the outside air can be from 5-0 degrees Celsius or colder

This is while warm air is being circulated in the home. The compressor doesn't work as hard.

Since this system can obtain several times (usually about 3 to 4 times) as much heat/cool as compared to conventional air conditioiners, it has therefore an energy-saving tool. Moreover, this system is an environmentally-friendly one in terms of carbon-dioxide emission (nil emission for heating) as it does not use fossil fuels like gas and wood fire furnaces. Since the heat exchanger installed in the earth is sealed, there is no exchange of any fluids with the sub-surface and therefore it does not pollute the groundwater. Also, since heat is not emitted into the atmosphere, which happens when air conditioners are used heavily during the summer, there is therefore none of the “heat island” effect with this system. In Australia, the installation cost is similar to conventional systems depending on land size available for excavation. The number of GSHP installations is currently low. However, the GSHP system is now attracting attention in Australia owing to the system’s environmentally-friendly nature and its ultimate contribution as an energy-saving tool in the battle against global warming.