Converting an Oil Heating System to a Pellet Heating System: What Does It Cost?

The conversion from an oil heating system to a pellet heating system costs an average of €19,500.
In general, prices range between €8,500 and €30,500.

Switching from oil to pellet heating is an attractive solution for several reasons. As an eco-friendly alternative to fossil fuels like oil and gas, pellet heating is eligible for government subsidies.

It is also ideal for properties without a gas connection or where a gas tank cannot or should not be installed.

The total conversion cost includes both the removal of the old oil system and the installation of the new pellet heating components, such as:

• Removing the old heating system and disposing of the oil tank

• Wood/pellet boiler

• Pellet storage

• Pellet transport system

• Buffer storage tank

• Connection and installation costs

In addition, there are ongoing operating costs for fuel, chimney sweeping, electricity, and maintenance.

Depending on the size of the heating system, total costs range from €8,500 to €30,500.

What Subsidies Are Available?

If you plan to convert your oil heating system to a pellet system, you can benefit from attractive government funding.
Through the exchange bonus for oil heating systems, you can receive a 45% subsidy on eligible investment costs. These include heating and control technology, heat storage units, and necessary renovation work.

The subsidy applies to pellet systems with an output of at least 5 kW, including both pure pellet boilers and combination boilers or pellet stoves with water pockets.

Applications must be submitted to the Federal Office for Economic Affairs and Export Control (BAFA).
To receive the grant, it’s important to apply before the project begins, i.e., before signing the installation contract or purchasing the system.

Oil vs. Pellet Heating: What Are the Running Costs?

To evaluate the economic benefits and calculate the payback period of switching from oil to pellets, it’s worth comparing the ongoing operating costs:

What Does Installation Cost?

In addition to purchase costs, you’ll need to factor in installation costs for the system and its components.
The hourly rate for a heating installer is €40–€60, with total installation costs ranging from €2,000 to €3,000.

Electrical work costs €40–€55 per hour, plus travel expenses of €10–€50.

What Does a Pellet Heating System Cost?

Pellet heating systems can usually replace oil systems without major issues, as they are suitable for high flow temperatures and can continue using existing radiators.

The cost of the boiler mainly depends on its output capacity:

• Up to 25 kW: €5,000 – €12,000

• Up to 50 kW: €8,000 – €16,000

• Up to 120 kW (for multi-family homes): €15,000 – €32,000

Another important cost factor is pellet storage. Depending on the property, you can choose between a sack silo or an underground tank.
Plan about 0.9–1.0 m³ per kWh of heating demand.

• Sack silo: €450 – €4,000

• Underground tank: €3,000 – €9,000

You’ll also need a pellet transport system to move pellets from the storage area to the combustion chamber:

• Screw conveyor: €700 – €900

• Vacuum feed system: €1,000 – €3,800

If you want to combine your heating system with a solar thermal system, you’ll need a buffer storage tank:

• Up to 500 L: €2,800 – €3,900

• Up to 1,000 L: €2,900 – €4,500

What Does Removing the Old Oil Heating System Cost?

Removing the old system includes dismantling the boiler, disposing of the oil tank, and managing any leftover oil.

• Removing and disposing of a steel oil boiler (up to 50 kW): €320 – €580

• Oil tank disposal: approx. €1,000

• Leftover oil resale: about €0.25 per liter

Example Calculation: Switching from Oil to Pellet Heating

A single-family house plans to replace its old oil heating system with an eco-friendly pellet heating system.
Both the oil boiler and tank must be removed.
The new system includes a 25 kW pellet boiler, a sack silo, and a screw conveyor for pellet transport.
Here’s the cost breakdown: