Anyone with a refrigerator or an air conditioner has witnessed the operation of a heat pump, even though the term heat pump may be unfamiliar. All of these machines, rather than making heat, take existing heat and move it from a lower-temperature location to a higher-temperature location. Refrigerators and air conditioners are heat pumps that remove heat from colder interior spaces to warmer exterior spaces for cooling purposes. Heat pumps also move heat from a low-temperature source to a high-temperature space for heating.

An air-source heat pump, for example, extracts heat from outdoor air and pumps it indoors. A geothermal heat pump works the same way, except that its heat source is the warmth of the earth. The process of elevating low-temperature heat to over 100° F and transferring it indoors involves a cycle of evaporation, compression, condensation and expansion. A refrigerant is used as the heat-transfer medium which circulates within the heat pump. The cycle starts as the cold liquid refrigerant passes through a heat exchanger (evaporator) and absorbs heat from the low-temperature source (fluid from the ground loop). The refrigerant evaporates as heat is absorbed.

The gaseous refrigerant then passes through a compressor where the refrigerant is pressurized, raising its temperature to more than 180° F . The hot gas then circulates through a refrigerant-to-air heat exchanger where heat is removed and pumped into the building at about 100° F . When it loses the heat, the refrigerant changes back to a liquid. The liquid is cooled as it passes through an expansion valve and begins the process again. To work as an air conditioner, the system's flow is reversed.