This study addresses the challenge of "extracting heat without extracting water" in geothermal energy systems, which is a key requirement for sustainable resource utilization. A novel downhole heat exchanger (NDHE) was designed to increase the heat exchange efficiency in compact geothermal single-well systems. This research employed theoretical analysis, experimental studies, and field tests. The heat exchanger, which incorporates a single-pass flow for geothermal water and a dual-pass flow for ground loop water, achieved a heat transfer coefficient of 2200–3200 W/(m2·K) and a maximum heat extraction power of 32 kW under laboratory conditions. In field applications, the system demonstrated a heat extraction power of 185 kW—38-58% higher than that of existing technologies—sufficient to meet the 155 kW heating demand for buildings. Under full load, the predicted maximum capacity reached 555 kW, more than quadrupling the performance of current single-well systems. This innovative heat exchanger significantly enhances both heat extraction efficiency and scalability, paving the way for broader adoption of geothermal energy technologies.