Budget 2027: Boiler Scrappage Scheme of Up to €14,500 Proposed as Government Targets Heating Costs
Minister for Energy Darragh O'Brien has proposed a boiler scrappage scheme that would offer households grants of up to €14,500 to replace oil and kerosene boilers with heat pumps, combining a new €2,000 scrappage grant with existing SEAI support of up to €12,500, as the government prepares Budget 2027 with energy and heating costs identified as the top priority for voters in the latest Irish Times/Ipsos B&A poll.
Background
The cost of home heating has become one of the most politically charged issues in Irish public life over the past two years. Wholesale electricity prices have surged by nearly 77 per cent compared with the previous year, contributing to an Irish inflation rate of 3.7 per cent and placing severe pressure on household budgets, particularly in rural areas where dependence on home heating oil is highest. The government has been under sustained pressure to provide targeted relief, and the boiler scrappage scheme represents its most ambitious response to date.
The proposal builds on the existing Sustainable Energy Authority of Ireland (SEAI) grant scheme for heat pump installations, which currently provides up to €12,500 for eligible households. The new scrappage element — a €2,000 grant specifically for the removal of oil and kerosene boilers — is designed to address a gap in the existing scheme: many households are reluctant to make the switch to heat pumps because the upfront cost, even after the SEAI grant, remains prohibitive. The additional €2,000 is intended to tip the balance for households that are on the fence.
Minister O'Brien announced the proposal while attending the UN General Assembly in New York, where he was part of the Irish government delegation. He indicated that he planned to bring the proposal to Cabinet for approval in late September, with a view to the scheme commencing in January 2027 if approved.
Key Developments
The scheme would apply to boilers that have reached the end of their functional lifespan, with specific eligibility criteria — including the year of installation — to be finalised during Cabinet discussions. The combined grant of up to €14,500 would be available to households that replace an oil or kerosene boiler with a heat pump, subject to the property meeting the minimum energy efficiency standards required for heat pump installation.
In addition to the boiler scrappage scheme, Minister O'Brien indicated that he would seek Cabinet approval for a grant for domestic battery storage, intended to allow households already utilising solar energy to store power more efficiently. These battery storage grants were expected to be in place as early as October 2026, ahead of the main budget package.
The proposals come against a backdrop of significant public spending pressure. The Central Bank has warned against broad support measures that could fuel inflation, and the government is navigating a projected public spending overrun of more than €1.4 billion. The targeted nature of the boiler scrappage scheme — focused on households replacing end-of-life boilers rather than providing a blanket subsidy — is designed to address the Central Bank's concerns while still delivering meaningful relief to those most affected by heating costs.
Why It Matters
The boiler scrappage scheme is significant both as a cost-of-living measure and as a climate policy. Ireland has committed to reducing its greenhouse gas emissions by 51 per cent by 2030, and the residential heating sector — which accounts for a significant proportion of national emissions — is one of the most challenging areas to decarbonise. The transition from oil and gas boilers to heat pumps is central to the government's climate strategy, but it has been proceeding more slowly than planned, in part because of the upfront cost barrier.
The scheme is also politically significant. The Irish Times poll published on Thursday found that energy and heating bill support is the top priority for voters in Budget 2027, ahead of housing support and public services spending. A government that can credibly claim to be addressing this concern — with a concrete, well-designed scheme rather than a vague promise — will be in a stronger position heading into the budget debate. The challenge is to ensure that the scheme is accessible to the households that need it most, including those in rural areas with older housing stock and limited access to the contractors needed to install heat pumps.
Local Impact
The boiler scrappage scheme will be of particular relevance to households in rural Ireland, where dependence on home heating oil is highest and where the transition to heat pumps has been slowest. In counties such as Mayo, Roscommon, Galway, and Donegal, a significant proportion of homes are heated by oil boilers, many of which are approaching the end of their operational life. The SEAI has identified these areas as priorities for its retrofit programme, and the additional scrappage grant is expected to accelerate uptake in communities where the existing grant has not been sufficient to overcome the cost barrier. In urban areas, the scheme will be most relevant to older housing stock in areas such as Dublin's inner suburbs, Cork's northside, and Limerick city, where oil heating remains common.
What's Next
Minister O'Brien is expected to bring the boiler scrappage scheme to Cabinet for approval in the week of September 28. If approved, the scheme will be announced as part of Budget 2027 in mid-October and will come into effect in January 2027. The SEAI will be responsible for administering the scheme, and is expected to publish detailed eligibility criteria and application procedures in November. The battery storage grant scheme is expected to be announced separately, ahead of the main budget, with applications opening in October 2026.
