Geothermal heating and cooling gets a lot of attention in the energy revolution.  The U.S. federal tax system, for instance, will currently give you a tax credit of 30% of the installed cost.  That means a $25,000 installation will cost you only $17,500.  But a new conventional furnace -- say, propane or oil -- might cost less than half that, and also be qualified for a $1500 tax credit.  So what's all the excitement?

Your excitement sensor has to be set to "delayed gratification."  The payback is in the long-term fuel savings.  Depending on your fuel consumption and future fuel prices, you might pay off the cost of replacing your system in 5 to 10 years.  After that, the fuel savings are all in your pocket.  If you sell your house in the meantime, the presence of geothermal and your record of low energy bills should boost the price accordingly.

Don't I need, like, some volcanic activity to get geothermal heat?

What the heck is geothermal?  If you're over hot springs or near a volcano, it's easy to see where you might get some heat from the earth.  Or perhaps from volcanic materials falling out of the sky.  But these things play in Peoria, too, where volcanoes are, let us say, thin on the ground.  And, they provide air conditioning as well as heat; something few volcanoes do without substantial replumbing.

The "geo" part of a geothermal system is a loop of tubing hundreds of feet long that is laid into the earth.  By being in contact with the earth for a long distance, the loop can bring the temperature of any circulating fluid up or down to the earth's temperature.  In that process, heat is added to that fluid if it started out colder than the earth, or removed from that fluid if it started out warmer.  That fluid runs to the house.

(To really get this concept you have to think of heat as being different from temperature.  Heat is energy; if it is concentrated in a small amount of stuff, that stuff is hot; if it's distributed across a larger amount of stuff, that stuff is not quite so hot.  To see this, consider putting a tablespoon of boiling water into a cup of cold tea.  All the heat energy of the boiling water is still there, it's just distributed throughout more water so the temperature is lower than boiling.)

The Heat-O-Magic Heat Pump

The real trick to geothermal systems is in your house: a clever machine called a heat pump, which is run by electricity.  The clever part is that the heat energy you get out is several times greater than the electric energy you put in.  That's right.  And upon reading that statement, your internal fraud alert ought to be ringing.  More output than you put in?  Sounds like a perpetual motion fairy tale.

The unlikely-sounding answer is that you are taking heat energy out of the liquid that circulates through the ground loop, which achieves a temperature of about 50-55 degrees Farenheit at a depth of eight feet or more down.  OK, but how does this 50-degree fluid heat your house to, say, 70 degrees?  Heat always flows from warm bodies to cool ones; you and your spouse, in bed, in the winter, provides a fine example.  That's where the heat pump comes in (but not in bed): it "pumps" heat in the desired direction to achieve the necessary temperature.  (It's kind of like reconstituting your tablespoon of boiling water and cup of cold tea, starting from a cup of tepid tea.)

The heat pump is in your house, and has an internal loop containing a "refrigerant" fluid; that internal loop is put in close contact with the ground loop so heat flows easily between the two loops and the refrigerant reaches a temperature near 50 degrees.  By compressing the internal refrigerant (which is a gas at that point), the heat pump squeezes the gas to a temperature higher than your room temperature.  The heat therefore flows into your cooler house air that is blown past the hot refrigerant tubing and then around your house.  You can experience this same heat-pump phenomenon by pumping up a bicycle tire: the pump gets quite hot because it's squeezing a lot of lower-temperature air and concentrating a lot of heat in a small volume.

The cycle continues.  To get another serving of heat out of the ground, the pump then expands that refrigerant gas that has exhausted its surplus heat.  This expansion drops the gas temperature below the 50-degree temperature of the circulating liquid in the ground loop.  Heat then flows nicely from the warmer ground loop coil to the refrigerant coil, and the cycle begins again.  To air-condition the house, you essentially run the pump backwards, dumping heat into the soil.

Don't confuse the heat pump's action with simply heating 50-degree air after it flows past the geo loop.  Yes, if you were doing that, warming air from 50 degrees to 70 would be less expensive than warming up the winter outdoor air from, say, 30 degrees F, to 70.  But a heat pump is more effective yet, and cheaper by a factor of 2 to 4.

I still don't get it

Still confused?  Don't be embarrassed, that's about a semester's worth of engineering thermodynamics in four paragraphs.

Think of it like sponging a puddle from the floor up and into a sink.  The liquid in the puddle is analogous to heat.  This puddle is below sink height (height being analogous to temperature) where we want it, so it's not about to flow there spontaneously.  To pick up the puddle, we absorb it into a comparatively dry sponge (the heat pump).  We then lift the sponge to sink level, squeeze it dry, and do the cycle again.

My head hurts

Still sound weird and alien?  You have the same system in your refrigerator, in essence.  It pumps heat out of the cold interior to the warmer air: opposite to the way heat would flow if the fridge were just an icebox.  Air conditioners work similarly.  A heat pump is just an air conditioner installed backwards.

Or, in summary, it's magic.