Open loop geothermal uses the naturally occurring ground water we call well water as a "tap" to the natural energy of the earth. The water in the earth attains the same temperature as the earth itself. The open loop system uses a pump to move some of this water out of the earth and deliver it to the geothermal unit. There the geothermal unit either removes or adds energy to the water as needed and releases that water back to the earth to again attain the temperature of the earth. This is a very simple system and in areas where the ground water is plentiful. It is a very good way to heat and cool a building. In most cases, the same well that supplies domestic water to the building supplies the well water to the geothermal unit.
Closed loop is a system where a series of plastic piping loops are buried directly in the earth. An antifreeze solution is circulated through this series of loops and through the geothermal system. The geothermal unit adds or removes energy from the solution as needed. After leaving the geothermal unit, the solution flows through the loops and the earth brings it back to its natural temperature. The size and length of the loops determine how well this is accomplished by the earth.