How Heat Pumps Work
A good way to describe a heat pump is that it works the opposite way to a fridge i.e. instead of pumping hot air out of a fridge to keep the inside of it cold, a heat pump absorbs ambient heat and releases it in your home.
The heat source for your heat pump can be:
Ground-sourced Heat Pumps
1. A ground heat exchanger (lengths of pipe) is buried in the ground, either in a borehole (vertically) or a trench (horizontally). The pipe is usually a closed circuit and is filled with a mixture o f water and antifreeze, which is pumped around the pipe absorbing heat from the ground.
2. In the same way that your fridge uses refrigerant to extract heat from the inside, keeping your food cool, a ground source heat pump extracts heat from the ground, and uses it to heat your home. A ground source heat pump has three main parts:
a) The exchanger/evaporator absorbs the heat using the liquid in the ground loop.
b) The compressor (There is a compressor in your fridge - it is responsible for the ‘whirring') moves the gaseous refrigerant round the heat pump and compresses the refrigerant which increases its temperature to the level needed for the heat distribution circuit.
c) The condenser, (the hot section at the back of your fridge) gives up heat to a hot water tank which feeds into the heat distribution system.
3. The Heat distribution system can consist of under floor heating or radiators for space heating and in some cases water storage for hot water supply.
Water-sourced Heat Pumps
Work in the same way as a ground-sourced heat pump, except the heat exchanging pipe-work is submerged in either flowing water (stream, river, etc.) or a large body of water such as a lake.
Air-sourced Heat Pumps
An air source heat pump extracts heat from the outside air even when the outside temperature is as low as minus 15° C. The main components in the heat pump are the compressor, the expansion valve and two heat exchangers (an evaporator and a condenser). 
1. Refrigerant in the evaporator is colder than the heat source. This causes the heat to move from the heat source (in this case the outside air) to the refrigerant, which then evaporates.
2. This vapour moves to the compressor and reaches a higher temperature and pressure.
3. The hot vapour now enters the condenser and gives off heat as it condenses.
4. The refrigerant then moves to the expansion valve; drops in temperature and pressure; and then returns to the evaporator.
Unlike a ground source pump the system uses no external pipes and most of the working elements reside within the building.