A geothermal system is initially more expensive to set up

Question

A geothermal system is initially more expensive to set up than a conventional heating and cooling system, but the annual operating costs are much cheaper.

a)  How many years would it take for the geothermal system to pay for itself? Assume that you are looking to install a new system, and that you can obtain a government grant to do so. Use the costs that were mentioned on the previous page. Show all of your calculations. (5 marks)

Installation Costs

• geothermal system: $20 000

• conventional system: $3500

• government grant for geothermal installation: $7000

Operating Costs

• geothermal: $100/month

• conventional: $150/month, plus $400/yr for air conditioning

b)  From an environmental perspective, describe two other advantages of switching to a geothermal system.