The CGC Group Hybrid Heat Pump System is a novel combination of two traditional commercial HVAC building technologies. The system combines conventional water cooled air conditioning and hydronic space heating, all in one package. A CGC Hybrid unit operates as a fan coil in heating and a water cooled DX unit in cooling. The compressors do not operate in the heating mode. They can cool or heat any space at any time of the year. Instead of a refrigerant reversing valve for heating, the CGC Hybrid unit diverts the loop fluid to a hydronic heating coil located inside the unit. This loop fluid varies in temperature depending on outdoor ambient conditions. As the ambient temperature gets colder, the fluid temperature is increased.