Mid Sweden University

In response to environmental and supply security concerns associated with fossil fuels, promising small-scale wood heating systems with sizable market potentials have started to penetrate the residential heating market in Europe and elsewhere. Despite significant technological progress that led to cost reduction, increased levels of convenience, improved reliability and reduced environmental impact, the widespread diffusion of such systems will nonetheless take many years or even decades. 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 these technologies. In this article we cover three important aspects related to small-scale wood pellet heating systems. First, we summarise recent technological, socio-economic and institutional trends. Second, results from a comparative analysis of the direct and indirect external costs and benefits of these technologies versus other heating technologies are reported. Third, the usefulness of various diffusion modelling approaches used in economics is discussed in the light of the technology scrutinised and existing data constraints.