This paper presents an application of an exergoeconomic model, through exergy and cost accounting analyses, to the Gonen geothermal district heating system (GDHS) in Balikesir, Turkey for the entire system and its components. This exergoeconomic model is used to reveal the cost formation process and the productive interaction between components. The exergy destructions in the overall Gonen GDHS are quantified and illustrated for a reference temperature of 4 degrees C. The results indicate that the exergy destructions in the system occur primarily as a result of losses in the cooled geothermal water injected back into the reservoir, pumps, heat exchangers, and pipelines. Total exergy destruction and reinjection exergy of the cooled geothermal water result in 1010 kW (accounting for 32.49%),320.3 kW (accounting for 10%) of the total exergy input to the Gonen GDHS, respectively. Both energy and exergy efficiencies of the overall Gonen GDHS are also investigated to analyze the system performance, as these efficiencies are determined to be 42% and 50%, respectively. It is found that an increase of the load condition leads to a decrease in the overall thermal costs, which will result in more cost-effective energy systems for buildings. (c) 2008 Elsevier B.V. All rights reserved.