Geothermal heat pumps work to heat and cool your house in such a way that's nearly impossible to explain in brief.
Basically, a long length of plastic pipe, the "loop field," is buried deep below ground level to take advantage of the Earth's natural, stable temperature (50° to 60° year round). The loop field picks up heat to warm your house in the winter. In the summer, it removes heat from your home and discharge it into the cooler ground below.
Depending on the configuration, that loop field may need to be buried up to 200 feet deep, not a depth you could easily hit with your hardware store shovel. Therefore, the price tag on a project like this can very easily dip into tens of thousands of dollars (House Logic suggests that "a geothermal heat pump for a 2,000 sq. ft. house will cost about $20,000").
But the benefits are worth it. Conservative estimates suggest that you'll cut your winter heating and summer cooling bills in half. But you could see up to a 70 percent savings—nearly $700 per year. That's even before you factor in free hot water every summer. That's right—the heat extracted from your home during warm summer months can be directly used to heat up water for your showers.