The need of innovative solutions for buildings heating and air-conditioning systems is driven by economical and environmental concerns, which are strongly supported by EU Directives. Buildings account for 40% of total energy consumption in the European Union . The sector is expanding, which is bound to increase its energy consumption. Therefore, reduction of energy consumption and the use of energy from renewable sources in the residential and commercial buildings sector constitute important measures needed to reduce the Union’s energy dependency and greenhouse gas emissions.The proposed EFFiHEAT-DEMO project is the follow-up of the on-going FP7 Research for SMEs project EFFiHEAT “Development of high EFFiciency Stirling HEAT pump” Grant Agreement no. 286814, financed from FP7-SME-2011 call, which has started in October 2011. The overall objective of the EFFiHEAT project is to develop and validate cost-efficient based on Stirling engine of novel design geothermal heat pump technology with 25% higher COP comparing to technologies in operation. Currently the all required knowledge needed to achieve the technological objectives has been generated, scientific objectives are quantified and verified and 1st year deliverables and reports are approved.The proposed EFFiHEAT-DEMO project aims to bring to the market the innovative energy efficient (EE) technology for the commercial and residential sectors. The heating and/or cooling technology will be targeted, but not limited, to geothermal heat sources enabling up to 75% energy savings and reduced costs for energy consumption. To achieve this goal EFFiHEAT-DEMO will demonstrate the at full-scale the novel cost-efficient geothermal heat pump technology based on novel design Stirling engine developed under the project EFFiHEAT.