A geothermal, or ground-source, heat pump trades a higher install cost for the most stable heat source available: the earth itself. Because the ground stays far more constant than the air, these systems reach efficiency levels air-source units cannot.
How it works and why the ground helps
The ground is a steadier reservoir than the air. The Department of Energy notes that temperatures about 30 feet below the surface remain relatively constant year-round, between about 50F (10C) and 59F (15C). The DOE explains that when ambient temperatures are colder than the ground, a geothermal heat pump removes heat from the collector's fluids, concentrates it, and transfers it to the building. Because it draws from that stable source rather than frigid winter air, the DOE reports geothermal systems are quieter, last longer, and require less maintenance than air-source systems.
Efficiency and savings
The efficiency numbers are the headline. EnergySage reports geothermal heat pumps typically have an EER between 13 and 18 for cooling and a COP between 3 and 5 for heating. ENERGY STAR quantifies the savings: certified models use 61% less energy than a standard model, saving nearly $830 annually and more than $9,500 over the 15-year life of the product. The Department of Energy's FEMP program lists an ENERGY STAR required level of EER/COP 17.1/3.6 and a best-available level of 26.1/4.8, per the December 2024 Qualified Products List, covering open loop, closed loop, and direct geoexchange products.
Loop types and depths
The ground loop is what makes geothermal site-specific. EnergySage describes horizontal loops lying about four to six feet below the surface, vertical loops running 100 to 400 feet into the ground, and pond or lake loops sitting at least eight feet below the water surface. Each has a best fit: EnergySage notes horizontal loops are often best for residential installations, vertical loops suit commercial buildings or cases where minimizing landscape disturbance matters, and pond or lake loops are typically the least expensive but only feasible with a suitable body of water nearby.
Open vs closed loop, and the expired credit
Loops also differ in how they handle water. EnergySage notes open-loop systems tend to have lower upfront costs and higher efficiencies but require an adequate supply of clean groundwater, while closed-loop installations are more practical and common in most situations. On incentives, a federal tax credit of 30% applied to geothermal property placed in service before January 1, 2026. As of today that window has closed, so treat it as historical rather than a credit you can currently claim; verify any current incentive with a tax professional before counting on it.
Frequently asked questions
Why is geothermal so efficient?
It draws from stable ground temperatures. The DOE notes soil about 30 feet down stays roughly 50F to 59F year-round, so the system is not fighting frigid winter air. EnergySage cites heating COPs of 3 to 5.
How much can it save?
ENERGY STAR reports certified geothermal models use 61% less energy than a standard model, saving nearly $830 a year and more than $9,500 over the 15-year product life.
What loop type should I use?
EnergySage notes horizontal loops (4 to 6 feet deep) are often best for homes, vertical loops (100 to 400 feet) suit commercial or space-limited sites, and pond or lake loops are cheapest where a suitable water body exists.
What is the difference between open and closed loop?
EnergySage notes open-loop systems have lower upfront cost and higher efficiency but need clean groundwater, while closed-loop is more practical and common in most situations.
Is there still a federal tax credit?
The 30% credit applied to systems placed in service before January 1, 2026, so that window has closed. Confirm any current incentive with a tax professional.