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Geothermal technology relies on the fact that the Earth remains at a relatively constant temperature throughout the year, warmer than the air above it during the winter and cooler in the summer, similar at a cave. The geothermal heat pump takes advantage of this by transferring heat stored in the Earth or in ground water into a building during the winter, and transferring it out of the building and back into the ground during the summer. The ground acts as a heat source in winter and a heat sink in summer.
Its great advantage is that it works by concentrating naturally existing heat, rather than by producing heat through combustion of fossil fuels. A geothermal heat pump does not create heat by burning fuel. In winter it collects heat stored in the ground. In summer it remove heat from the space being serviced and transfers it to the ground.
There are two types of geothermal appellations: Geothermal and Geo-exchange.

Old Faithful at Yellowstone National Park (USA).
Geothermal, also referred as high-grade geothermal energy is the heat of the earth’s pressure that turns water into stream. Old Faithful at Yellowstone National Park (USA) is an excellent example 1).

Geo-Exchange system that can transfer heat from or to ground.
Geo-exchange systems refer to heat pump systems connected to the earth to provide a source for energy. This heat is actually stored solar energy. The heat can also be taken from a stream of water as a well, a lake or a river. It is also called low grade geothermal. The heating system that collect heat this way have different names as Geothermal Heat Pumps, Earth-coupled Water Source Heat Pumps, Earth Exchange Systems, Geo-exchange Systems and Underground Thermal Energy Storage Systems.
A vertical loop uses drilling to install the loop in a 100 to 200 foot bore hole.
A horizontal loop uses a trencher or backhoe to install the coil below the frost line in a six to eight-foot deep trench.
A slinky loop is a spiral of pipe laid about six feet below the surface.
Earth's temperature changes in response to weather changes, but there is less change at greater depths. Less obvious, but important to earth coil performance, is the time lag. The earth temperature several feet deep reaches its coldest or warmest temperature several weeks after building loads peak, with an annual swing ranging from 18 to 26°F for most sodded surfaces.
At depths of twenty feet or more, there is no significant change from summer to winter, and the mean ground temperature approaches the annual average air temperature plus 2°F. down to about 200 feet. Thus, vertical loops generally require much less pipe than horizontal loops closer to the surface 3).
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The SWITCH Energy Digest is made possible by financial support from the members of SWITCH, the Ontario Trillium Foundation, the Ontario Ministry of the Environment, and the Community Adjustment Fund.