Say geothermal, and what comes to mind is happy Icelanders cavorting in a geyser-heated outdoor pool in the depths of an Arctic winter--or summer, for that matter.

But employing geothermal technology for residential heating and cooling does not require Old Faithful in the front yard or an active volcano down the street.

All it requires is a way to tap into the fact that the temperature below the ground remains constant year-round--no matter what the weather raging above--and then pump the heat into a building.

White Horse Village, a continuing-care retirement community in Newtown Square, Pa., has neither a geyser nor a volcano, but it does have a geothermal heating and cooling system that has been operating since the community opened in 1989.

The system cost a steep $4.1 million to install. The initial investment may be high, but if every one of the 527 units represents an annual savings of 40 percent to 60 percent in utility costs, which is what geothermal advocates suggest, the high upfront expense will be absorbed in a relatively short time.

"When we opened in 1989, we had the largest geothermal system in the United States," said Bob Higgins, director of operations. "And in that time, we've seen a great payback by this system for our investment."

The idea of geothermal heating and cooling of the houses, apartments and health-care center at White Horse Village was brought to its developers in 1987 by Heat Tech, a now-defunct geothermal company, and other vendors, Higgins said.

The system was built while the housing was being constructed and was ready to go when White Horse opened, he said.

"Because we have nothing to compare it to, we can't determine how much energy the system is saving," Higgins said. "But statistics show that for the average homeowner, the energy savings can pay for the system in four years. That's a good indication of the payback."

The Geothermal Heat Pump Consortium, made up of 800 equipment manufacturers and allied trades and 240 utility companies nationwide, calls this geothermal technology GeoExchange. In the summer, the system captures heat from inside a home or business and transfers it to the ground.

In the winter, the process is reversed. Heat is extracted from the ground--known as the heat sink--and is carried by fluid to the house, where compressors and heat exchangers concentrate the energy and release it inside the house at a higher temperature.

This is known as the vapor compression cycle and is the same principle as is used in a refrigerator: drawing heat from the interior rather than injecting cold air.

The geothermal system, therefore, does not create heat; it transfers heat, which is what makes the system so efficient.

The process works because the temperature below the ground--or under a pond or other water surface--is constant. Heat is transferred between the building and the earth through circulating groundwater, called an "open loop" system, or using a closed heat exchanger--a "closed loop" system--that contains water or an environmentally safe solution of water and antifreeze. This fluid "connects" the heat pump to the earth.

Loops are typically made of high-density polyethylene, a plastic that, though extremely durable, permits heat to pass through it efficiently, so it does not retard the exchange of heat between the earth and the fluid in the loop.

When the installers connect the sections of pipe, they heat-fuse the joints, which makes the connections stronger than the pipe itself. But the pipe is strong, just the same, and most manufacturers offer up to 50-year warranties.

The length of the loop--there are five kinds, with the vertical-bore closed loop and the horizontal closed loop the most common--depends on the kind of loop configuration used, the heating and air-conditioning load of the building or buildings, soil conditions, the local climate and landscaping.

Larger houses with larger space-conditioning requirements generally need larger loops than smaller houses. Houses in climates where temperatures are extreme generally require larger loops.

Usually before the loop is installed, a heat loss/heat gain analysis is conducted to determine the size of the loop needed.

The vertical-bore system that White Horse Village uses was created by boring 445 holes in the ground 500 feet deep. Each hole contains a single loop of pipe with a U-bend at the bottom.

After the pipe is inserted, the hole is backfilled or grouted. Each vertical pipe is then connected to a horizontal pipe, which also is concealed underground. The horizontal pipe carries fluid in the closed system.

Vertical loops are generally more expensive to install than horizontal loops, but require less piping--White Horse's existing system has 156,000 vertical feet--because the earth deeper down is cooler than the air temperature in the summer and warmer in the winter. That makes vertical loops ideal for the climate of the mid-Atlantic region, which, though relatively mild, can include extremes.

Geothermal systems use heat pumps, but they are different from conventional heat pumps that use outdoor air as their heat sink. Geothermal pumps do not have to work as hard because they draw heat from a source with a moderate temperature.

At a depth of six feet, the soil temperature in most regions of the Earth remains stable--between 45 and 70 degrees. While conventional heat pumps have to locate heat from the atmosphere when the air temperature is below freezing, geothermal pumps have an easier time capturing heat from soil where the temperature is 50 degrees.

While a geothermal system transfers heat, a conventional furnace creates heat by burning a fuel. There is no combustion involved in geothermal heating, nor are there byproducts such as carbon monoxide, which results if the combustion is incomplete.

Studies by the U.S. Environmental Protection Agency found that geothermal systems are about 48 percent more efficient than the best gas furnaces and 75 percent more efficient than oil furnaces.

Similar EPA studies found that geothermal systems have the lowest lifetime costs of all systems today, as well as the least effect on the environment. They also are comparatively maintenance-free.

"Since I would handle any of the problems with the system, I can tell you that there have been few," Higgins said. "The only time there might be is if the temperature outside fell below 20 degrees, when the system initially could have some difficulty drawing a lot of heat from the ground.

"But that's when the electric-resistor panel on the other side of the heat pump kicks in to warm things up, so the problem is taken care of quickly and automatically," he said.

Even then, the problem is barely noticeable.

Every unit at White Horse Village has a heat pump. The heat pump, which includes the compressor, loop-to-fluid heat exchanger and controls, can fit into a closet, Higgins said.

Although geothermal is still not a household word--except maybe in Iceland--Higgins has noticed that the public awareness and understanding of the concept have increased significantly in the decade that he has been involved in operations at White Horse Village.

"When someone new comes in, we give them a package of information that explains geothermal," Higgins said. "I'm finding that more and more people know what it is even before we start telling them about it."