Pellet heating is a heating system in which wood pellets (small pellets from wood chips and sawdust) are combusted. Other pelletized fuels such as straw pellets are used occasionally. Today's central heating system which run on wood pellets as a renewable energy source are comparable in operation and maintenance of oil and gas heating systems.

There are two different operating systems for pellet heating systems, one being single ovens with direct heat release into the living space and the other being central heating systems (pellet central heating systems) including control and feedback control systems.

Pellet stoves or single ovens are generally plants in the power range of max. 6-8 kW and less. They are usually placed directly in the living room. They usually have a small reservoir of pellet fuel which can last for one or more days. Fuel supply and the control of combustion are controlled automatically and the ash removal is done manually. The heat is usually delivered directly into the room. The range of individual pellet stoves is similarly diverse as wood-burning stoves, including versions with viewings window which provide a view of the fire.

Pellet boilers are used as central heating systems for heat requirements (heating load) of more than 3.9 kW (Kilowatt). But pellet central heating systems are not only used in single- or two-family homes (up to 30 kW), but also for larger residential or business units with heat requirements of a few hundred kW. Pellet burner systems run most efficiently at full load and can usually be regulated down to up to 30% of its full capacity. Since the warmup phase of pellet ovens usually takes longer than for oil or gas firing systems, short burning phases have negative effects on the fuel efficiency. In order to improve energy efficiency and reduce harmful emissions, pellet ovens are usually combined with buffer systems like water tanks, for example.

Separate pellet burner, which can be mounted to an existing oil- or wood-fired boiler, are sometimes offered as an inexpensive alternative to a complete heating changeover. But the efficiency of these add-on furnaces is reduced. Usually add-on furnaces are not subsidized by government funds.

Similar to wood chip fuel heating systems also pellet fuel is delivered periodically and automatically from the pellet storage (for central heating systems) or the day tank (for pellet stove) according to need in the combustion chamber. With the heat generated from the heating circuit water is heated in the boiler of the pellet in pellet central heating systems. The heat distribution is the same as in other systems, which use water for heat distribution. Unlike for oil or gas heating systems, pellet heating systems demand the integration of a hot water tank in the heating system in order to reduce heat losses.

The furnace is automatically supplied with combustible material. The control technology of the system regulates the fuel input gradually in order to match the required heat output. Depending on the specific system, the supplied wood pellets are automatically ignited either with hot air blowers, or it uses a permanent ember bed in the combustion chamber.

Wood pellet heating systems work with different techniques of charging and combustion: Today there are specifically developed loading techniques for pellet combustion like drop chute firing, underfeed firing, side-fed firing or the use of a roller grate system. The method of charging and combustion of the pellet fuel is divided into 5 technologies.