Energy systems in transition: perspectives for the diffusion of small-scale wood pellet heating technology

Promising small-scale wood pellet heating systems with sizable market potentials have started to penetrate the residential heating market in Europe and elsewhere. Despite significant technological progress, cost reduction, improved convenience and reliability, and reduced environmental impact, diffusion of such systems will nonetheless take time. Framework and market conditions, and especially drivers and barriers and the overall merits of such systems in comparison to alternative solutions, need to be properly understood by policy-makers and entrepreneurs for the successful promotion of this technology. In this article we cover three important aspects related to small-scale pellet heating systems. First, we summarise recent technological, socio-economic, and institutional trends. Second, we report on results from a comparative analysis of the direct and indirect external costs and benefits of this technology. Third, we discuss the usefulness of various diffusion modelling approaches used in economics in the light of the technology scrutinised and existing data constraints.