Geothermal energy is a natural energy that comes from the hot rocks inside the earth, deep below the surface. To harness this energy, two holes are dug into the ground, one for water to be pumped through. As the water passes the hot rocks, it is transformed to steam, which comes out of the second hole and aids in producing electricity. The heat exchanger only uses electricity to move the heat, not produce it.
In Michigan, the temperature in the earth just a few feet below the surface remains at a 50-55 degrees Fahrenheit. So in winter, geothermal energy can be used to heat as the earth temperature is warmer than the air, and in the summer geothermal energy can be used to cool as the earth temperature is colder than the air. To switch from heating to cooling, all you have to do is reverse the flow and temperature compression.