This paper describes experiments and analyses on an improved underground heat exchanger by using a no-dig method for the purpose of the cost reduction of a space heating and cooling system using underground thermal energy. First, the improved underground heat exchanger was installed on the campus of Hokkaido University, and it was shown that a ground source heat pump system utilizing the heat exchanger was sufficient for space heating and cooling. Second, evaluation program of the heat exchanger was developed, and the program was verified to give good predictions by comparing with experimental results. As a result of system simulations, an energy reduction for a system installation relative to a conventional vertical earth heat exchanger reached 78%. The primary energy reduction rate including the system installation and operation relative to a typical air source heat pump was 29%. (c) 2006 Elsevier Ltd. All rights reserved.