In air-conditioners, heat pump systems take warm air outside the home and pass it through an indoor coil within the system. The coil absorbs the heat, cooling it, and a fan blows the air through ducts inside the home.
As a heating system, an outside coil takes the heat from cold air (air contains heat at all temperatures) and creates a vapor within the refrigeration unit. This heated vapor blows through the air ducts.
Air-Source Heat Pump System
Air-source heat pumps transfer heat between the home and outdoors and are the most common type of heat pumps. They also work as dehumidifiers because the system naturally dehumidifies when it cools the air.
It is also the most inefficient heating system in extreme winter temperatures because the outside coils can freeze.
Dual-Fuel Heat Pump System
A dual-fuel heat pump uses a normal air-source heat pump and adds a secondary gas furnace system. This allows the heat pump to operate efficiently in mild summers and winters but can switch to the gas furnace if the winter becomes too cold.
Geo-Thermal Heat Pump System
A geo-thermal heat pump uses the ground or water as a heat source instead of air. It can be more expensive to install, but geo-thermal heat pumps benefit from higher efficiencies due to the stable temperatures of ground and water.
They also work in extreme winter temperatures.