A questionnaire survey of 1,500 detached house owners was carried out in the autumn of 2004 to find out the factors influencing the adoption and diffusion of pellet heating systems in the Swedish residential sector. The results revealed that most of the respondents had no plans to install new heating systems as they were satisfied with their existing ones. Economic aspects and functional reliability were the most important factors in the respondents' choice of heating system while environmental factors were of less importance. Therefore, internalizing external costs, such as environmental costs, might be effective in influencing house owners to adopt environmentally benign heating systems. Installers were the most important source of information on heating systems. Hence, it is important that they could inform the consumers comprehensively and accurately about different heating systems. Respondents perceived the relative advantage of pellet boilers over oil or electricity-based heating systems, but bedrock heat pump system was ranked higher than pellet heating system in every aspect except for investment cost. Pellet heating system has advantage over district heating system with respect to investment cost and annual cost of heating. District heating system was considered as most functionally reliable and automatic.