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Ground source heat pumps (GSHP) work in exactly the same way as an Air source heat pump (ASHP) but instead of extracting energy from the air, they extract it from the ground via heat transfer fluid in pipes. The layout of the pipes is either in a borehole format (a vertical pipe going straight down into the ground) or a ground loop format. Ground loops require much more space as the pipes are laid horizontally, usually about 1 meter under the surface.

Ground source systems are slightly more efficient than air source systems due to the stability of the ground temperatures throughout the year.