Pellet boiler subsidies 2026: up to 80 percent grant – how it works

A pellet boiler is the heating system that works most like the old oil heating – just with wood instead of oil. It replaces oil and gas boilers one for one, works with the existing radiators and meets the 65 percent renewable rule of the German Buildings Energy Act (GEG). And it is subsidised: anyone switching in 2026 can receive up to 80 percent of the eligible costs as a grant. Here is how the subsidy system is structured and what to watch out for when applying.

As of September 2026. Subsidy rates and deadlines change regularly; the current guidelines of KfW (programme 458) and BAFA are binding. This article is no substitute for energy advice.

How the grant is made up

The Federal Funding for Efficient Buildings (BEG) subsidises the installation of a pellet boiler in existing buildings from three building blocks:

• Basic grant 30 % for every eligible biomass heating system, regardless of income.
• Climate speed bonus (currently 16 %) when a functioning oil, coal, gas floor or night storage heating system or a gas or biomass heating system at least 20 years old is replaced. The bonus decreases in stages from February 2027 – deciding early pays off.
• Income bonus, staggered by taxable household income (up to 40 %); the income threshold rises for each child.

The bonuses can be combined, the total subsidy is capped at 80 percent. Eligible costs are up to €28,000 for the first residential unit – so up to €22,400 grant if fully utilised. The former efficiency bonus was dropped with the July 2026 reform.

What a pellet boiler must fulfil

• buffer storage tank with at least 30 litres per kilowatt of rated heat output,
• dust emissions of no more than 10 mg/m³ (2.5 mg/m³ from October 2027 – i.e. usually a particle separator),
• seasonal space heating efficiency of at least 81 %,
• hydraulic balancing (procedure B) and a heat meter,
• installation by a specialist company, application before the contract is concluded or with a condition precedent.

The way to the grant in five steps

1. Involve an energy consultant or specialist company. An energy efficiency expert or the heating installer prepares the "confirmation for application" (BzA).
2. Quote with a condition. The supply or service contract must contain a condition precedent or subsequent in case the subsidy is not approved.
3. Submit the application in the "Meine KfW" portal with the BzA ID. Installation only starts after approval (or after the application, at your own risk).
4. Installation and commissioning within the 36-month approval period.
5. Submit proof (invoices, confirmation after completion) – the grant is paid out.

Supplementary loan and tax bonus

For the own contribution, KfW offers a low-interest supplementary loan; households below the income threshold receive an additional interest reduction. Those who do not apply for a grant can alternatively deduct 20 percent of the costs from tax over three years (Section 35c of the German Income Tax Act) – but not both together.

Pellet stoves with a water jacket

A water-bearing pellet stove that supports heating and hot water is also eligible if it meets the technical requirements. A pure room-air pellet stove without a water connection is not subsidised. Which suits whom is explained in our article Pellet stove or pellet boiler?

And afterwards: the fuel

A subsidised heating system only heats as well as its fuel. Certified ENplus® A1 pellets are a warranty requirement for most boilers – and they keep the burner, auger and separator clean. How many pellets a house needs and how to plan storage is explained in the article Calculating pellet consumption.

Conclusion

2026 is a good year to switch: the basic grant is high, the climate speed bonus is still fully available, and the technology is mature. What matters is the order – application first, then contract – and a specialist company that knows the paperwork.