It works exactly like a air conditioning unit or I suppose more accurately a dehumidifier
A compressor, compresses refrigerant gas which heats up as a result, this moves to a condenser which is in this unit combined with a heat exchanger so the heat from the gas is transferred into the water in the heating system.
The gas then move through an expansion valve into an evaporator where it becomes cold, then a dryer and back to he compressor.
However unlike an aircon unit there is one main fan which blow air through the heat exchanger to cool it down and the warm air is passed through the evaporator as well to prevent freezing.
It's all contained in one unit and the only required connections are electricity and water. Unlike aircon which has a separate evaporator mounted in the house so requires pipe work to carry refrigerant gas.
These systems are not very efficient in the way they exchange the heat and a lot of the produced heat is wasted and blown through the unit by fans.
Some how though they get away with calling it a "green" "alternative" energy source probably because it runs on electricity and as a result has a relatively low carbon foot print compared to a gas boiler. But definitely not any cheaper.
