Works great for iceland.
I know of a commercially owned structure which uses well-water (not very deep wells either) warmed heat pumps, instead of air-warmed heat pumps. Since heat pumps work ideally at over 40 degrees, and groundwater is a constant 54 degrees, using water jackets instead of air works admirably--also the units are placed in the cellar, not outside. Of course they also work great for the AC too.
The energy savings for this energy ineffeciently constructed (historic) building with no insulation, amount to hundreds of dollars a month. It took 2 wells though...at a cost of 10,000 a well. Still, in not to long of a time, the system should pay for itself.