Energy poverty alleviation: effective policies, best practices and innovative schemes

1. Introduction

In pursuit of transition pathways toward a sustainable and resilient energy sector, climate change, security of supply and energy poverty are set in the spotlight. As for the first two, they appear to have drawn significant attention in the literature throughout the years, since there is a wide variety of related studies and analyzes. However, less attention has been laid on the third axis, even though it encompasses great influence on the lives of millions of people worldwide.

According to the International Energy Agency, it is estimated that 1.3–2.6 billion people on the planet experience energy poverty, thus suffering from its multiple adverse effects on both the social and economic sectors as well as the environment. The current situation in the European Union (EU) regarding the energy poverty levels, based on the most recent data for key measuring indicators from the EU Energy Poverty Observatory, indicate that the estimated number of energy poor citizens varies between 50 and 125 million people, whilst the absence of targeted EU policies with regard to combating energy poverty has inflated the impacts of the problem.

Energy poverty is broadly understood as the inability of households to maintain adequate levels of energy services at an affordable cost. Energy poverty is caused by the interplay of three main factors, namely (a) low incomes; (b) high energy need (due to inefficient housing); (c) high energy prices. Although each of these factors is distinct, there is clear overlap and interplay amongst them. In addition, other causal factors that illustrate the regional, structural, economic and social specificities, such as climatic variation, fuel availability, stock type and performance, tenure, high living costs, etc., can have a large bearing on energy poverty (SocialWatt 2019).

The European Commission (EC) has been pushing the need to enhance consumer protection and help energy poor consumers already from the second energy package (Directive 2003/54/EC and Directive 2003/55/EC). The third energy package (Directive 2009/72/EC and Directive 2009/73/EC) introduced the concept of energy poverty and let the final responsibility to each Member State. Although the number of countries that recognize energy poverty formally in legislation or policy is rising, the majority of Member States do not have a formal definition.

Energy poverty is recognized in two key EU energy efficiency directives: (a) the Energy Performance of Buildings Directive (EPBD), which requires that relevant actions to alleviate energy poverty have to be outlined in the national renovation strategy; (b) the Energy Efficiency Directive that requires a share of measures under Article 7 (energy efficiency obligations or alternative measures) to be implemented amongst vulnerable households, including those affected by energy poverty. Finally, the role of renewable energy communities to help fight energy poverty through reduced consumption and lower supply tariffs has been recognized in the revised Renewable Energy Directive.

This Special Issue aims to contribute to the analysis of the status quo of energy poverty, as well as to the design of effective policies and innovative energy poverty schemes for energy efficiency, urban sustainability and climate actions.

2. Delving into the special issue

The Special Issue opens with a study by Spiliotis et al. (2020), introducing a framework established upon an enhanced version of the well-known 10% measurement index. It assists utilities to identify energy poor households among their clients, being adjusted by a set of weather-, income-, and energy- driven variables. The proposed framework is demonstrated in the region of Attica, Greece, exploiting a large dataset of households that use natural gas as a primary heating energy source.

Castaño-Rosa et al. (2020) continue, laying emphasis on an innovative index for the analysis of vulnerability to energy poverty according to monetary, energy, and thermal comfort factors. The proposed framework has the potential to evaluate the societal impacts of current energy poverty policies by providing the economic analysis of different situations of vulnerability. The elicited results are validated through their contrast with real evidence captured from households in Salford, UK, which they feature great similarity.

The third study is by Sokolowski et al. (2020). They present a multidimensional index that accounts for five dimensions of energy deprivation: two objective indicators of “low income, high costs” and “high actual cost”, as well as three subjective indicators of “not warm enough home”, “housing faults”, and “bills difficulties”. They define households as poor if at least two forms of deprivation are present. In 2017, 10% of households in Poland suffered from multidimensional energy poverty.

Three thousand five hundred and twelve students from seven European countries participated in the research, implemented by Kousis et al., (2020), making it the largest study to date targeting this specific social group. This group is vulnerable to fuel poverty, and their exposure to such conditions can have a detrimental effect on both their mental and physical health, as well as their social life.

Other articles that belong to this Special Issue and have been published in previous issues of “Energy Sources, Part B: Economics, Planning, and Policy” are the following:

The approach of Costa-Campi, Jové-Llopis, and Trujillo-Baute (2019) indicates that the income aspect plays a key role toward alleviating energy poverty. The authors provide an economic analysis of the relationship between energy poverty, energy consumption and elements linked to household income. Empirical analysis of statistical data is also employed to quantify and diagnose the problem of energy poverty in Spain.

The analysis of Seebauer, Friesenecker, and Eisfeld (2019) combines secondary data analysis, semi-structured expert interviews, and an in-depth analysis of legal documents, in order to illustrate the intersection of climate and social policy in retrofitting buildings and providing adequate and affordable housing, respectively. The whole framework is stress-tested in a case study in Austria.

In the next study, Kose (2019) investigates the interconnection between energy poverty and health outcomes in a case study in Turkey. A nationally representative household survey is employed to provide insights for the relationship between a health status index and a self-reported energy poverty indicator.

Lakatos and Arsenopoulos (2019) uses a SWOT (strengths, weaknesses, opportunities, threats) analysis, in order to provide an overview of the existing European financial instruments and successful schemes focused on facilitating the implementation of energy efficiency-related measures, in the context of addressing the problem of energy poverty. Particular emphasis is given on how the social dimension of energy poverty could be consolidated into the future policymaking processes.

Finally, Papada et al. (2019) attempt to give a holistic picture of the problem of energy poverty, using Fuzzy Cognitive Mapping (FCM), in a case study in Greece. The proposed FCM model constitutes a key implementation pillar for policy makers interested in developing and testing alternative measures for tackling energy poverty, since it provides an in-depth analysis of the energy poverty system’s structure and function.

3. Conclusions

A valuable insight from this Special Issue is that identifying energy poor households is a prerequisite for mitigating energy poverty and saving energy. However, common definitions are missing and many policymakers struggle to grasp the multi-dimensional concept of energy poverty. Most of the existing indicators used for capturing the phenomenon are too generic to be effectively applied, ignoring the impact of important influencing variables (e.g., weather, socioeconomic conditions, area particularities, and health and comfort standards), while also depending on detailed data that are hard to obtain in large scale.

The regulations protecting the data required for automatically performing accurate computations, limit the options available, rendering utilities as a key player, since they are the holders of such information. Article 7 and energy efficiency obligations defined by EU, further extend the role that utilities and energy providers are expected to play in the following years.

A number of articles in this Special Issue focus on multidimensional energy poverty indexes that can be useful for policy makers searching for a detailed understanding of the characteristics of energy poor households. Households that suffer from multiple types of energy deprivation are likely to be in a worse situation than households affected by only one form of deprivation.

Policies for energy poverty alleviation should be specifically designed to target different subgroups of the population with respect to their needs and living conditions as shown by the respective contributions. Multi-stakeholder platforms seem suitable for policy dialogue and inter-ministerial collaboration to mainstream the integration of climate and social policy in strategies, programs, and budgeting.

Acknowledgments

The Editors would like to express their sincere thanks and gratitude to the authors, who submitted papers to this Special Issue and, especially, the referees, who spent their valuable time on providing their detailed reviews. Without their help, it would be impossible to prepare this Special Issue in line with the high standards set from the beginning.

Finally, the Editors would like to thank the members of the Institute of Communication and Computer Systems (ICCS), the Institute for European Energy and Climate Policy (IEECP) and the whole SocialWatt team for their dedication and support. In this respect, the Editors would like to acknowledge the support from the European Commission (EC), that is financing SocialWatt project (https://socialwatt.eu/) under the Horizon 2020 Research and Innovation Programme grant agreement No 845905. The content of this Special Issue is the sole responsibility of its authors and editors and does not necessarily reflect the views of the EC.