A ground source heat pump circulates liquid consisting of water and antifreeze through a loop of piping which is buried in the earth beside your property. The heat from the ground is absorbed into the fluid and then passes through a heat exchanger into the heat pump. The temperature variance in the ground is so minimal it allows the heat pump to be efficient all year round, through the coldest periods.
The fluid then passes through a compressor that raises it to a higher temperature, which can then heat water for the heating and supply hot water to your house. The cycle continues as the cool water passes back through the loop and is reheated as and when hot water and heat for your home is required. Conventionally the loop is laid flat or coiled two meters below the ground, otherwise, the loop can be placed vertically into the ground around 100 meters deep producing the same levels of efficiency. Heat pumps only have very little effect on the environment as they need small amounts of electricity to run, but all the heat extracted is naturally renewable and obtained without cost.