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Where Does Energy Poverty End and Where Does It Begin? A Review of Dimensions, Determinants and Impacts on Households

Oskar Szczygieł

^1,*

Alena Harbiankova

and

Maria Manso

Department of Rural Economics, Institute of Rural and Agricultural Development, Polish Academy of Sciences, Nowy Swiat 72, 00-330 Warsaw, Poland

Faculty of Engineering, Lusófona University, Campo Grande, 376, 1749-024 Lisbon, Portugal

Author to whom correspondence should be addressed.

Energies 2024, 17(24), 6429; https://doi.org/10.3390/en17246429

Submission received: 31 October 2024 / Revised: 17 December 2024 / Accepted: 18 December 2024 / Published: 20 December 2024

(This article belongs to the Special Issue Recognition of and Response to Energy Poverty: Measurement, Policies and Measures)

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Abstract

The paper explores the concept of energy poverty (EP) by examining its definition, dimensions, determinants, and impacts on households. The study underscores the necessity of comprehending the multifaceted subjective and objective nature of energy poverty, as evidenced by the proposal of a comprehensive tool for measuring energy poverty from a broad perspective. The concept of energy poverty comprises seven principal dimensions, namely, political, economic, health, infrastructure, social, energy transfer, and climate and environmental. Each of these dimensions operates as both a cause and a consequence of energy poverty, thereby creating a cyclical relationship between the various determinants. A significant aspect of the study is the utilization of objective and subjective indicators. These include measures of the relationship between expenditure and income, the technical condition of buildings, thermal comfort, debt, and initiatives taken to prevent this phenomenon at the household level. The concept posits a novel attribute of EP, namely, “transitional state”, which signifies that energy poverty can concurrently serve as a catalyst and a consequence of adverse socio-economic phenomena in certain instances affecting the overall quality of life. The recommendations encompass using a holistic method that considers not only the analysis of the energy poverty index but also detailed and subjective indicators. The proposed tool will enable a more effective formulation of public policy at the European Union level, providing a unified direction to research this phenomenon at multiple precision levels.

Keywords:

energy poverty; energy poverty index; quality of life; objective and subjective approach

1. Introduction

Energy poverty (EP) is increasingly recognized as a significant socio-economic issue affecting households worldwide. The term ’energy poverty’ is defined as the inability of individuals or families to access adequate energy services at an affordable cost [1,2]. Consequently, this significantly impacts both the quality of life and the well-being of those affected. While traditional ideas of poverty focus solely on income levels, the concept of energy poverty encompasses a broader range of aspects, including energy affordability, accessibility, efficiency, and vulnerability to energy price fluctuations [3]. The concept of energy poverty holds particular relevance in the context of global efforts to promote sustainable development, reduce inequality, and respond to the challenges of climate change [4].

Recently, the rising costs of energy in conjunction with the unequal distribution of resources and energy infrastructures have served to exacerbate the issue of energy poverty in both developed and developing countries [5]. As energy services become increasingly crucial parts of our everyday lives, providing heating, cooling, lighting, and communication, the lack of access to affordable and reliable energy sources poses significant risks to social justice and economic stability. The European Union (EU), in particular, prioritizes energy poverty on its policy agenda, recognizing that vulnerable households experience disproportionate impacts from energy transitions and market dynamics [6].

The alleviation of energy poverty is not only a matter of social justice but also a fundamental aspect of sustainable development [7] and climate action [8]. It is closely linked to achieving the United Nations Sustainable Development Goals (SDGs), particularly SDG 7, which aims to ensure access to affordable, reliable, sustainable, and modern energy for all. Furthermore, energy poverty can lead to adverse health effects [9,10], social exclusion [11], reduced educational opportunities [12], and limited economic productivity [13], especially in low-income and vulnerable communities [14].

1.1. Objective and Subjective Measures of EP

The measurement of energy poverty employs both objective and subjective methodologies, as each offers a distinctive perspective on the nature and gravity of this multifaceted issue [15,16]. The identification of households experiencing energy poverty is dependent upon the utilization of objective indicators, which rely on quantitative data to ascertain those struggling with energy costs or inadequate living conditions. One frequently employed objective indicator is the Low Income, High Cost (LIHC), which defines a household as energy poor if it spends more than 10% of its income on energy expenses. This method identifies households with low incomes and elevated energy costs above the norm. This expenditure-based indicator facilitates a transparent, evidence-based comprehension of the demographic characteristics associated with energy poverty. Further objective indicators include the quality and energy efficiency of residential properties, such as the presence of dampness, inadequate insulation, or outdated heating systems. These issues can be evaluated through the utilization of building energy performance ratings or surveys, thereby offering insights into the structural causes of energy poverty. In contrast, subjective indicators are concerned with capturing the lived experiences and perceptions of energy hardship as experienced by households. These indicators evaluate whether households perceive their living space to be adequately warm or cold are concerned about the financial implications of energy bills or experience discomfort due to substandard housing conditions. To illustrate this, the EU-SILC survey incorporates self-reported queries pertaining to a household’s capacity to maintain an adequate indoor temperature and the existence of a delay in payment of utility bills. Such indicators provide a more intricate perspective on energy poverty, acknowledging that individuals may encounter hardship even if they do not meet the strict expenditure-based criteria. By integrating subjective insights, policymakers can more comprehensively comprehend the social and psychological dimensions of energy poverty, which may not be fully captured by objective statistics alone.

The discrepancies in the objective assessment methods used are evident in the example of two indicators presented in Figure 1. The presented maps compare two indicators: the inability to maintain adequate heat in the home by people with incomes below 60% of the median (a) and the number of days requiring heating and cooling (b). The differences in the indicated maps indicate strong spatial polarization in Europe. The map showing the subjective indicator of the inability to maintain heat among people whose incomes are below 60% of the median shows that the greatest problems occur in southern Europe, especially in Portugal, Greece, Bulgaria, and Turkey, with the exception of Lithuania. The percentage of people who have difficulties with heating their homes ranges from 29.8% to 43.6%. In northern countries like Norway, Finland, or Denmark, there is a much smaller percentage of the population with an inability to maintain adequate heat in their home, up to less than 10%. The next map presents the summary indicator of days requiring heating and cooling. This value is higher in Northern Europe. Norway, Finland, and Sweden are marked by a large number of days requiring heating and cooling (from 3993 to 5587-degree days). The presentation of HDD (the Heating Degree Days (HDD) index is used to quantify the demand for heating based on outdoor temperature relative to a threshold temperature of 15 °C, below which heating is required to maintain indoor comfort) and CDD (the degree-day index for cooling (CDD) is used to measure the severity of heat and, consequently, the cooling demand; CDD takes into account the outdoor temperature in relation to a threshold temperature of 24 °C, which represents the point at which cooling is necessary to maintain comfort indoors; the index measures how many degrees Celsius the average outdoor temperature exceeds this threshold, indicating the demand for cooling) indicators in a summary manner is intended to show the total number of days requiring thermal interventions, both for heating and cooling to an adequate temperature. In Southern Europe, they are lower, which means that the need for interventions (of an objective nature taking into account weather conditions) is lower. A comparison of these maps reveals a clear polarization. Although in northern countries the need for heating is higher, analyzing subjective feelings, citizens of these countries experience difficulties less often. In southern countries, despite milder climatic conditions and therefore objectively lower thermal needs, residents more often struggle with the problem of heating.

1.2. Strategic Planning Documents Covering EP Issue

European strategic documents related to energy poverty have evolved, shifting from guidelines focused on energy and environmental policy to more detailed social tools aimed at protecting citizens from the impacts of rising energy prices and climate change. In 2018, the Energy Efficiency Directive (Directive (EU) 2018/2002) required member states to take action to reduce energy consumption with a particular focus on households vulnerable to energy poverty. In the same year, the Renewable Energy Directive (RED II, Directive (EU) 2018/2001) set a target for 32% of energy in the EU to come from renewables by 2030, promoting prosumer development, advanced biofuels, and increased use of renewables in heating, cooling, and transport, alongside regulatory barrier reduction and cross-border projects to support EU decarbonization and energy security. The 2019 European Green Deal (COM/2019/640 final) set a goal for climate neutrality by 2050, emphasizing fair transition and support for low-income households in adopting energy-saving technologies to reduce energy costs. In the same vein, the “Clean Energy for All Europeans” package launched in 2019 offered consumer protection solutions and a sustainable energy market, exemplified by the Directive on common rules for the internal market for electricity (Directive (EU) 2019/944), giving consumers greater control over their energy use and enabling comparison of supplier offers through real-time usage information. The Regulation on the Governance of the Energy Union (Regulation (EU) 2018/1999) required member states to monitor energy poverty issues, allowing for precise adaptation of national assistance programs. This was a significant step toward unified strategic programs, though implementation remains ongoing. Further advancements included the introduction of the Just Transition Mechanism (COM/2020/22 final) and the Just Transition Fund (Regulation (EU) 2021/1056) in 2020 and 2021, aimed at supporting regions reliant on high-emission energy sources, like coal, where energy poverty risk is particularly high. In 2021, the Recovery and Resilience Facility (Regulation (EU) 2021/241) and the European Pillar of Social Rights Action Plan (COM/2021/102 final) highlighted the need to support the poorest, allocating funds for residential energy upgrades to reduce energy costs and improve living standards for low-income individuals, recognizing energy poverty as a central social challenge. In response to the 2022 energy crisis triggered by Russia’s aggression in Ukraine, the REPowerEU Plan (COM/2022/230 final) was launched to accelerate the development of renewables and reduce the EU’s dependence on Russian resources, aiming to stabilize energy prices and support households highly vulnerable to rising bills. Table 1 illustrates the progression of EU policies and strategies designed to address energy poverty. It demonstrates a notable shift in emphasis toward social justice, energy efficiency, the adoption of renewable energy sources, and the mitigation of the impact of energy transitions.

A review of national strategies for combating energy poverty across the European Union reveals that only a limited number of member states have developed dedicated strategies at the national level. Ireland has the ‘Strategy to combat energy poverty’ as does Portugal, which has the ‘National long-term strategy to combat energy poverty’, and Spain, which has the ‘National strategy against energy poverty’. It would appear that all remaining EU countries lack specific strategies for reducing energy poverty. Rather, their policies have an impact on the matter, demonstrating the heterogeneous approaches and policy frameworks that have been implemented to address energy poverty. These strategies comprise a combination of policies designed to enhance energy efficiency, provide financial assistance, implement targeted tariffs, and facilitate social inclusion. For example, Poland in addressing EP has the ‘Energy Policy of Poland until 2040 (EPP2040)’. The document sets out an ambitious, consistent, and responsible path for Poland’s energy transition. This study follows a previous analysis of energy poverty in the Masovia region of Poland. A survey was conducted among 2000 residents of the Masovia Voivodeship and 625 social assistance beneficiaries in 2023. The results [17,18] highlighted the need for targeted interventions, including energy efficiency improvements, social support mechanisms, and public awareness campaigns. Key recommendations included modernizing heating systems, subsidizing energy-efficient home retrofits, and designing policies for vulnerable groups such as single-parent households, the elderly, and rural residents. This article aims to present a methodology based on these findings, integrating policy suggestions into a broader analytical framework.

The subject of energy poverty lends itself to a variety of approaches and methods. Research practices examine a variety of approaches to defining EP, identifying the underlying determinants of EP, formulating EP concepts, including the identification of appropriate indices and indicators [3], and applying different methods for EP measurement [19]. Additionally, they consider the consequences of EP [20]. Despite the considerable diversity of perspectives in the academic literature on the subject, this study aims to identify the principal elements that characterize the problem. This research investigates the underlying determinants that contribute to energy poverty and its associated consequences, while also exploring potential solutions for addressing EP. This study aims to address the following questions. How is energy poverty defined in the context of its vulnerabilities and consequences? What is the interrelationship between the latter two? To approach these questions, this study makes a contribution to the energy poverty field by examining the following: 1. The variety of vulnerabilities used to identify the progress of energy poverty. 2. The impact of energy poverty on diverse aspects of well-being. 3. Recommendations for short- and long-term policies. This paper comprises five Sections. Section 2 examines the theoretical framework of energy poverty, its main causes and consequences, and the methods used to measure it. Section 3 presents a theoretical framework for formulating the concept of energy poverty. Section 4 presents the concept of a multidimensional indicator of energy poverty. Section 5 provides a concluding summary of the research findings, offering insights into the alleviation of energy poverty through the presentation of policy recommendations.

2. Theoretical Approaches Defining EP

The identified research gap pertains to a dearth of empirical research on energy poverty, encompassing a comprehensive examination of the multifaceted vulnerabilities and consequences of this phenomenon. In order to achieve the research objective, an analysis of the extant literature was conducted using the following principal criteria of EP: definition, dimensions, and determinants.

EP definition lacks clarity, potentially impeding its measurement and, subsequently, the formulation of efficient policies to address this challenge [21]. The concept of energy poverty initially focused on thermal considerations, a perspective that was first explored by Bradshaw et al. [22]. However, following the evolution of social needs and expectations, the concept has expanded with additional elements, including socio-economic and aspirational dimensions.

The evolution of energy poverty studies entails a transition from an economy-centered focus to a more complex and multidimensional understanding of the issue. Originally, energy poverty was analyzed mainly in terms of energy costs and household income. While research has evolved, the economic dimension has expanded to encompass a variety of aspects affecting households facing energy poverty [23].

A simplified approach to defining energy poverty comprises three principal determinants: low income levels, low household energy efficiency, and the energy performance of buildings and high energy prices (Introduction to the Energy Advisory Hub (EPAH) Handbooks: A Guide to Understanding and Addressing Poverty, n.d.) [24].

In recent years, the EP concept has become increasingly complex and multifaceted, exhibiting variability across spatial and temporal contexts [25,26]. Such a multifaceted nature of EP reflects the influence of both income and non-income determinants, including both internal household (e.g., health status and subjective well-being) and external aspects (e.g., state energy policy, infrastructure, and public policy) [27,28,29,30,31]. Furthermore, more recent research has highlighted the significance of additional, equally essential requirements, including the need for cooling energy [32].

Considering EP measurement recent studies and practices employ three main methods: expenditure approach, consensual approach, and direct measurement (Introduction to the Energy Advisory Hub (EPAH) Handbooks: A Guide to Understanding and Addressing Poverty, n.d.; Sareen et al., 2020 [25]). Expenditure indicators originate from HBS (household budget surveys), employing a binary classification structure comprising two levels: high and low. The consensual indicators specific to EU member states derive from the EU-SILC survey and pertain to the ability to maintain optimal indoor heating (HH050) and the extent of reliance on utility bills (HS021).

As the definition of energy poverty has evolved, the determinants of this concept have also undergone a process of change. The vulnerability to energy poverty is shaped by multiple socio-economic, infrastructural, and environmental aspects. Table 2 provides the key areas of vulnerability to EP based on guidelines from EU initiatives. The EU initiatives provide a comprehensive approach to identifying and addressing areas of vulnerability to energy poverty. Key macro-areas of vulnerability are socio-demographic factors, household composition, health, energy literacy, cultural aspects, climate, housing conditions, mobility, socio-economic factors, policy and regulatory frameworks, and physical infrastructure. These areas are critical for understanding and addressing energy poverty effectively, highlighting the need for multi-faceted and region-specific policies and interventions.

Scholars while examining energy poverty tend to consider the issue from two principal perspectives exploring its vulnerabilities and consequences. Three principal categories of causes of energy poverty have been identified in [34]: technical, economic, and those associated with attitudes toward energy efficiency. Theoretical considerations emphasize the existence of different dimensions of energy poverty. These include the interconnection between health vulnerabilities and educational attainment, as well as poverty itself [35]. There is also a focus on the role of access to energy, affordability, flexibility, and energy efficiency, as the specific needs and practices involved [3]. The Energy Poverty Advisory Hub (2022) identifies five key determinants of vulnerability to energy poverty: sociodemographic, cultural, health, energy literacy, and household composition.

The EP vulnerability encompasses a variety of elements, including access, affordability, flexibility, energy efficiency, needs, and practices [3]. The following four main areas of EP have been identified for consideration in [27]: available infrastructure, energy efficiency, social and economic poverty, and well-being and health. An alternative approach considers three dynamic contingencies that collectively shape the necessity for energy services. These are climatic and environmental conditions; cultural norms and meanings, and institutional rules and expectations [36]. Energy poverty is associated with household composition, educational attainment, labor force status, energy-inefficient housing, and the heating system in place [37]. The following determinants of the population’s vulnerability to EP were identified in [36]: physical, socio-economic, and climatic. Table 3 provides a summary of the identified EP vulnerabilities.

The evidence regarding the consequences of energy poverty is of a similarly diverse nature (Table 4). The effects of energy poverty were identified in [37] as affecting three main dimensions: health, social, and economic. It was noted that the consequences of EP are centered on physical and mental health, as well as negative financial impacts on households. In addition to the social dimension, infrastructural and geographical aspects were also considered in the analysis. In particular, the impact of location and energy infrastructure on deprivation was evaluated [40]. Similar conclusions were reached in [41], with the identification of health, social, and technical dimensions. The author’s attention focuses on the consequences of low energy efficiency in buildings on health and comfort, as well as the relationship between heating costs and social integration. In [42], a similar perspective was adopted, viewing energy poverty more as a technical issue in their research and distinguishing economic, infrastructural [43], and technical dimensions. Some studies emphasize the political aspect of energy poverty. For instance, EP is framed as a political and economic challenge, focusing on its definition, measurement, and mitigation, while identifying its economic, political, and technical dimensions [44]. Energy poverty is also seen as a manifestation of social injustice, unequal resource distribution, and procedural aspects of policy [45]. From this perspective, energy poverty is examined in terms of social justice, political, and social dimensions. Another study examined the impact of political and technical barriers to accessibility on household economic conditions, emphasizing the political, technical, and economic aspects of energy poverty [3]. Individual behavior also plays a crucial role in this context. For example, consumption behaviors in relation to income and building energy efficiency have been analyzed, focusing on the economic, technical, and behavioral dimensions [46]. In contrast, the emotional aspects of energy poverty, such as stress and helplessness, as well as social relationships have been explored, suggesting that the emotional impacts of persistent poverty can have long-lasting negative psychological and social consequences [45,47,48]. For a comprehensive approach, it is necessary to consider the phenomenon in a multidimensional way. The integral nature of this issue includes economic, technical, social, health, and political aspects. This allows energy poverty to be seen not only as a household problem but also as a broader, programmatic issue encompassing social, environmental, and energy policy.

Recent consequences of energy poverty are more multifaceted, impacting health, financial stability, and regional disparities. The research conducted in Southern Europe [49] and Canada [48] has revealed the considerable impact that energy poverty has on health. It has been demonstrated that inadequate heating or cooling can result in an increased prevalence of respiratory and cardiovascular issues, a greater reliance on healthcare services, and a higher incidence of medication use, particularly among vulnerable populations. Financial stress is another critical consequence [50], indicating that the inability to maintain comfort standards leads to psychological stress and a constant struggle to cover essential costs. Furthermore, regional disparities play a pivotal role. Studies by [51,52], and [53] highlight that geographical aspects, including climate, urbanization, and energy infrastructure, exert a considerable influence on the extent of energy poverty. In Poland, for instance, rural areas with older housing stock and inadequate infrastructure are particularly susceptible to energy poverty. Furthermore, economic and environmental factors, including climate policy uncertainty, renewable energy consumption, and financial development, contribute to energy inequality, thereby exacerbating the divide between regions and social groups [54]. The impact on climate conditions and rural–urban divide was described in [54,55], energy and climate policies [56], and income inequality [57]. Collectively, these studies demonstrate that energy poverty has far-reaching consequences, affecting main domains such as physical health, mental well-being, financial stability, regional equity, policy, and the environment.

Table 4. Causes and consequences of EP. Source: Own Study.

Reference	Causes	Consequences
[58]	Dwellings’ energy performance gap (EPG) sub-index Population’s ability to implement alleviation measures (AIAM) sub-index
[37]	Socio-demographics Socio-economics Housing conditions Environmental behaviour
[59]	Economic dimension Social dimension Environmental dimension	Social factors and health Geographical locations Economic factors Political initiatives
[60]	Household characteristics, Socio-economic factors Environmental factors	Health Socio-economic
[61]	Affordability Energetic Quality Ability to Participate in the Energy Transition
[7]	Social Technical Economic Institutional Environmental
[62]	Income, Infrastructure perfection Location Demographic characteristics	Residential health Net income of the population Social justice Residential welfare National economy
[54]	Characteristics of the dwelling Socio-economic characteristics of the household Climate factors Regional factors
[63]	Climate policy uncertainty (CPU) Renewable energy consumption (RE) Financial development (FD) Gross Domestic Product (GDP) Urbanization (UR)
[64]	Socio-economic aspects, Housing characteristics, mechanical systems, Energy expenses, Behaviors, The awareness of available support initiatives
[65]	Social situation Wealth Energy intensity Energy cost
[66]	High Energy Cost Poor Energy Efficiency Low Income	Insufficient Warmth Within Dwellings Energy Arrears Dwelling Quality Issues
[67]	Income level Income distribution Energy prices Efficiency of energy usage	Housing cost overburden Inability to keep home adequately warm Arrears on utility bills
[5]	Household disposable income House conditions and efficiency Energy prices	Health Education Climate change
[68]	Socio-economic status and technology Residency status Heating and energy Climate and living conditions	Health, Economics, Politics, Environment

The proposed methods come from a study conducted in the Masovian province in 2023. At that time, energy poverty was seen as both a cause and consequence of poverty. In order to show these relationships, the study was conducted on two representative groups: social welfare beneficiaries receiving benefits at the time of the study, and a general sample of the province’s residents. The aim of the study was to determine the scale of energy poverty, diagnose its dimensions, and identify particularly vulnerable groups.

The study was conducted as part of the project, “Conducting a Study on the Causes of Energy Poverty in the Masovia Voivodeship, Along with Report Preparation (Diagnosis)” (project number 1/MCPS/05/2023/B/BS), completed in 2023. This study draws on data collected from residents and social welfare beneficiaries across all counties within the Masovian Voivodeship. The sample of residents compressed 2000 individuals, with data gathered via CAWI and CATI techniques. A purposeful sampling method was used, taking into account variables such as type of locality (city vs. village) and region (sub-region). Urban residents made up two-thirds of the sample (67.1%), while rural residents accounted for 32.9%. The highest participation rate was from Warsaw residents, with lower representation across individual sub-regions. The sample included beneficiaries from social assistance centers in the Masovian Voivodeship including a quota sample of 625 individuals. Respondents were selected from all counties in the Masovian Voivodeship. The data collection employed PAPI techniques (Paper and Pencil Interview) and individual in-depth interviews (IDI). In the sample, two-thirds of the respondents were women, and the majority were of working age (40–59 years old). Every third person lived in towns with more than 200 thousand inhabitants, and single-person households (47%) and people without dependent children (63%) dominated. Over 60% of respondents lived mainly on benefits, and 18% on pensions, with only 20% having income from work; 54% assessed their financial situation as bad.

The proposed set of indicators for studying energy poverty (Table 5) was used in the study in the Mazovian Voivodeship. These allow for a much more in-depth analysis of this phenomenon than in comparison to the constructed universal synthetic indicator. This set includes objective and subjective indicators as well as strategies used by households. The objective approach includes the indicator of poor technical condition of the building, which indicates that the household lives in a building with damage (e.g., leaking roof, rotting windows, damp walls). The Low Income/High Costs indicator (threshold 10% and 25%) includes the percentage of households spending more than 10% or 25% of their income on energy. The threshold can be used as an objective indicator of economic energy poverty with different degrees of deepening (state of threat of energy poverty, energy poverty, and deepened energy poverty). The percentage of households with debt for energy bills is a way to illustrate energy poverty in a very deep form. This is due to the rapid response of suppliers in the event of a failure to record a fee and an interruption in energy supply. Households that get into debt as a result of the inability to pay fees for meeting basic needs are characterized as being in the worst economic situation. Subjective approaches include household declarations regarding their energy situation. These include high energy costs, problems with paying bills, and insufficient thermal comfort, as well as an indicator of negative health consequences caused by inappropriate temperature. A group of indicators referring to the strategies adopted by households in the face of energy difficulties has also been specified. Two consensual indicators were used in the case type—in a narrow and broad approach. The first refers to the situation when households have to limit energy consumption to an absolute minimum, heating only the room in which they sleep. The second concerns the strategy of limiting energy needs to a level that residents consider economical. These indicators refer closely to the strategies of households living in energy poverty. They can be of a signal nature in recognizing potential problems and deepening them. The use of subjective data, such as household declarations of “high energy costs”, stems from the limitations of available datasets at the EU level. These data are derived from the EU-SILC survey, which is the only source providing comprehensive, cross-country information on this indicator. While an objective measure could theoretically be more precise, the absence of such data across all Member States makes it impossible to incorporate without conducting a separate, EU-wide representative survey. We acknowledge the inherent limitations of using subjective data, such as the increased likelihood of biases, including the researcher effect and other distortions. While such limitations are unavoidable given the data sources available, we believe that these subjective indicators still provide valuable insights into household experiences with energy costs. Furthermore, the use of subjective measures ensures consistency with widely accepted EU-level datasets, allowing for broader applicability and comparability across countries.

Multidimensional indicators allow for the inclusion of household adaptation strategies, such as limiting heating to one room, which better reflects the scale of the problem. The literature indicates that multidimensional studies enable a better understanding of energy poverty, especially in the context of specific local conditions and the subjective feelings of residents [69]. This approach is more flexible and provides an opportunity for more precise interventions, which is more difficult to achieve using a single synthetic indicator. Therefore, it is recommended to (a) unify the system of measuring energy poverty at the European Union level, and (b) use a package of indicators that illustrate this phenomenon in detail.

3. EP Determinants and Indicators

The subjective perception of energy poverty may refer to many aspects of everyday life, closely related to income, owned goods, as well as individual needs, preferences, and habits [70,71]. People at the highest risk of energy poverty can be divided into two groups due to socio-economic factors—related to the source of income of the household, its structure, age of household members; and infrastructural and technical factors—related to the technical condition of the building, equipment and condition of the heating system, and location of the building and residential premises (Figure 2).

The article aims to present a proposal for an index that can be used to express energy poverty in European Union countries. The proposal involves utilizing existing data from Eurostat, based on the theoretical assumptions previously outlined. Specifically, indicators have been selected for specific dimensions of energy poverty. Although the definition of EP is elusive and the phenomenon is characterized by a wide approach, its factors can be observed in individual dimensions. Cross-dimensional analysis allows for understanding EP not only as an independent phenomenon but also as both a cause and a consequence of poverty. Therefore, a broad view, e.g., comparing EU member states, requires taking into account broadly understood quality of life, socio-economic situation, etc.

Causes of energy poverty refer to the fundamental and systemic reasons that lead to it. Causes are the underlying reasons that explain why energy poverty occurs in particular cases. Factors of energy poverty refer to specific elements or conditions that influence the occurrence, intensity, or experience of energy poverty. Factors mediate how causes translate into experiences of energy poverty and shape the context in which they occur. Dimensions of energy poverty define the specific aspects that characterize and define the issue (Table 6). Collectively, they provide a holistic framework for interpreting energy poverty and focusing targeted efforts. In the context of the present study, energy poverty refers to the inability of households to afford the purchase of energy services, thereby preventing them from maintaining energy/thermal comfort and meeting their basic existential needs. Excessively high expenses for energy services emerge as a key factor in this inability, as perceived by individuals within the context of their own circumstances. The issue of energy poverty, therefore, has a number of interrelated dimensions, including political, economic, health, infrastructural, social, energy transfer, and climate [18,72], as shown in the identification and analysis of vulnerability to energy poverty necessitating a holistic approach that takes into account a range of causes, including building characteristics, energy performance, socio-economic aspects, population trends, indoor thermal comfort, aspects of well-being, and environmental considerations [5]. The considerations of the dimensions of energy poverty presented in this article are based on previously published research that synthesizes studies on energy poverty in the European Union [17]. Key aspects of the issue have been discussed, a definitional framework was introduced, and factors contributing to the occurrence of energy poverty, as well as its dimensions, were identified [17,18].

4. Results

The seven dimensions of energy poverty interact in a cyclical manner, creating a network of interconnected elements. Each dimension is responsible for contributing to different attributes (Table 7). The proposed concept of interconnected elements of energy poverty draws upon seven primary dimensions of EP, namely, politics, economics, health, infrastructure, social, energy transfer, and climate and environment. Each of these dimensions interacts with the others to produce four key attributes. This leads to the following four questions: What are the causes? What are the vulnerabilities? What is the transitional state? And what are the consequences?

The causes of energy poverty are complex and include political decisions, economic status, inadequate infrastructure, social exclusion, inefficient energy systems, and climatic challenges. In terms of vulnerability, certain groups and regions are more susceptible due to a number of constraints, including health conditions, social inequalities, poor infrastructure, and regional disparities in energy access.

The transitional state as an attribute of energy poverty highlights the dynamic nature of this condition, emphasizing its potential to evolve positively or negatively based on external interventions and circumstances. This attribute considers how energy policies, infrastructural developments, and targeted social programs can either support households in overcoming energy poverty or inadvertently deepen their vulnerabilities. Effective measures may enable a gradual transition toward improved energy access and affordability, reducing dependence on inefficient energy sources. Conversely, inadequate or poorly implemented interventions can entrench households in energy poverty, increasing their susceptibility to its adverse consequences. The impacts of energy poverty include adverse health impacts, economic stress, social exclusion, and increased exposure to climate risks.

Table 8 presents a concept of a multidimensional indicator of energy poverty encompassing seven dimensions and four attributes. The cells in the table provide an overview of the key focus points, which are essential for understanding the complexity and evolving nature of energy poverty. The multidimensional index, due to its broad scope describing phenomena not only directly related to energy poverty, is intended to indicate the risk of this condition. In accordance with the formulated concept, we have selected the indicators from the Eurostat databases that are most pertinent to our study (Table 9).

The proposed tool is designed primarily as a practical instrument aimed at policymakers. Its simplicity and reliance on widely available, historical data make it well-suited for identifying risks of energy poverty across the EU. Rather than measuring deprivation directly, the tool serves as a risk indicator that takes into account both household-level conditions and broader socio-economic factors. This approach ensures that the tool remains actionable and relevant for policy applications. Existing energy poverty indices, such as the Energy Poverty Vulnerability Index (EPVI) by Thomson et al. [73] or the Low Income/High Costs (LIHC) indicator proposed by Hills [46], prioritize detailed assessments of energy poverty. For instance, the EPVI evaluates multiple dimensions, including energy efficiency, energy affordability, and household vulnerability to external factors such as fuel price fluctuations. Similarly, the LIHC indicator focuses on identifying households with below-average incomes and above-average energy costs, providing a targeted analysis of economic strain due to energy expenses. While these indices are robust in assessing specific aspects of energy poverty, they often require detailed, localized data that may not be available consistently across the EU. Furthermore, their focus on detailed deprivation measurement can make them less adaptable for high-level policy applications or retrospective analyses. In contrast, our tool emphasizes simplicity and accessibility, relying on widely available datasets like EU-SILC to deliver a high-level risk indicator. This makes it particularly useful for tracking trends over time and informing EU-wide policy frameworks.

5. Discussion and Conclusions

The proposed framework utilizes a multidimensional approach that comprehensively captures EP through seven critical dimensions: politics, economics, health, infrastructure, social, energy transfer, and climate and environment. These dimensions facilitate an analysis of EP through the lens of four key attributes: causes, vulnerabilities, transitional state, and consequences.

Energy poverty results from a complex interaction of economic, social, technological, institutional, and environmental causes. Tackling energy poverty requires targeted interventions that take into account the socio-economic realities, housing conditions, regional disparities, and environmental vulnerabilities of affected populations. The following recommendations have been put forth for policy consideration:

Firstly, integrating policy responses necessitates identifying and addressing the interrelated economic, social, and environmental vulnerabilities faced by diverse communities. Additionally, effective policy implementation requires a coordinated approach across all levels of government, with inclusive engagement of affected communities, including but not limited to low-income households, rural communities, and other vulnerable groups [5]. It is important to note that the utilization of synthetic indicators may result in an oversimplification of complex phenomena. This is particularly pertinent when the scope of variables is extensive, which can potentially lead to the distortion of the actual differences between the units under study.

The issue of synthesizing multiple determinants into a single composite indicator can result in the overlooking of significant discrepancies between the phenomena under investigation and may also lead to a degree of subjectivity in the determination of the relative weights assigned to individual variables. Furthermore, the process of normalization and aggregation of data can result in erroneous conclusions. The use of synthetic indicators may result in simplifications that could potentially lead to the loss of pertinent information [74,75]. Conversely, synthetic indicators are distinguished by their utility in the formulation of policy. They facilitate the comparison of regions or periods in a unified manner. The fundamental concept is elucidated in [74] through the illustration of sustainable development indicators. Despite their inherent constraints, these indicators remain pivotal in the formulation of sustainable development policy, as they facilitate the synthesis of complex information into a format that is readily comprehensible for decision-makers. The essence of utilizing synthetic indicators thus entails striking a balance between pursuing precise and accurate outcomes and devising conceptual frameworks that are more practically applicable. An appropriate solution employs a combination of quantitative and qualitative methods [76,77].

In light of these assumptions, the appropriate next step involves expanding the proposed tool. The objective lies in developing universal tools capable of analyzing the phenomenon of energy poverty in a more comprehensive and cross-sectional manner. To address the intersection of energy poverty research with climate change and sustainable development, future studies should explore integrated approaches that consider environmental, social, and economic dimensions simultaneously. This includes examining how policies aimed at reducing greenhouse gas emissions, such as promoting renewable energy sources or improving building energy efficiency, can also mitigate energy poverty. Additionally, research should investigate the role of just transition strategies, ensuring that climate adaptation and mitigation measures are socially inclusive and economically viable. Developing multidimensional indices that incorporate climate resilience and energy justice metrics could offer a more comprehensive understanding of how these fields intersect, supporting more targeted and effective public policies. Qualitative analyses of the phenomenon of deprivation are primarily supported by its subjectivity, impermanence, and elusiveness [78].

The uniformity of poverty in a household may indicate its deepened form. In the case of households with the most difficult economic situation, forms of deprivation interpenetrate, often becoming causes and consequences of accumulating problems. In practice, this may mean difficulties in implementing aid programs, which for specific problems must be of an intervention nature, which does not solve problems in a long-term way. An obvious example is the phenomenon of energy poverty, which may, but does not have to, be a seasonal phenomenon.

In sum, some recommendations are given to be addressed in future policies:

Adopt a comprehensive, multidimensional approach to address energy poverty, with a particular focus on political, economic, health, infrastructure, social, energy transfer, and climate/environment dimensions;
Consider disparities between socio-economic realities, housing conditions, regional characteristics, and environmental vulnerabilities;
Address affected communities, particularly low-income households, rural communities, and other vulnerable groups;
Facilitate the expansion of EP measurement tools that encompass both qualitative and quantitative indicators;
Aim for sustainable, long-term solutions in order to circumvent the recurrence of energy poverty.

By incorporating these recommendations, policymakers can better design multidimensional strategies that effectively alleviate energy poverty in different contexts. To provide a more in-depth discussion of the proposed policy recommendations, it is essential to explore their applicability across different countries and regions. Policy measures such as subsidizing energy-efficient home upgrades, modernizing heating systems, and supporting vulnerable populations may require adaptation to local contexts due to variations in socio-economic conditions, climate, and energy infrastructure. For example, in colder regions, retrofitting homes with better insulation and efficient heating systems could be prioritized, while in warmer climates, cooling efficiency and solar energy integration might be more relevant. Additionally, differences in regulatory frameworks, energy markets, and levels of public awareness should guide the customization of policy tools. A comparative analysis of best practices from various countries could inform how energy poverty alleviation strategies can be effectively implemented in diverse socio-economic and environmental settings.

While the present study has the potential to make a valuable contribution to the field, it is important to acknowledge the limitations of the research. A notable limitation of this study is the unavailability of universal data for countries outside the European Union. This represents a significant obstacle to the further expansion of the study outside the EU. The current dataset permits an exclusive focus on this area, which considerably impedes the generalization of results and the adaptation of the index to countries with disparate social and energy realities. Accordingly, a promising avenue for future methodological growth could involve the pursuit of substitute, internationally consistent data sources.

Future research should concentrate on enhancing the existing knowledge base on energy poverty. One potential avenue for further investigation is the construction of an index, comprising the components proposed in the article. Subsequent proceedings will be contingent upon the findings and practicality of the proposed indicator, which seeks to facilitate the accurate identification of individuals and households most vulnerable to energy poverty. The practical application of this approach entails the more focused targeting of aid policies and the adaptation of systemic solutions. The next stage of the research should involve testing the proposed indicator in order to ascertain its accuracy, reliability, and applicability in a variety of socio-economic contexts. The findings of these analyses have the potential to inform the verification and potential optimization of the index construction, thereby facilitating its adaptation to changing conditions.

Author Contributions

Conceptualization, O.S., A.H. and M.M.; methodology, O.S. and A.H.; software, O.S.; validation, O.S., A.H. and M.M.; formal analysis, M.M.; investigation, O.S., A.H. and M.M.; resources, O.S.; data curation, O.S.; writing—original draft preparation, O.S. and A.H.; writing—review and editing, O.S., A.H. and M.M.; visualization, O.S.; supervision, A.H.; project administration, O.S.; funding acquisition, A.H. and M.M. All authors have read and agreed to the published version of the manuscript.

Funding

Maria Manso gratefully acknowledges the support from the Foundation for Science and Technology through funding UIDB/04625/2020 from the CERIS research unit (DOI: 10.54499/UIDB/04625/2020). Alena Harbiankova gratefully acknowledges the support from the European Union through funding NDICI-GEO-NEAR/2022/434-092-0052.

Data Availability Statement

Data sharing is not applicable.

Conflicts of Interest

The authors declare no conflicts of interest.

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Figure 1. Objective indicators of measuring EP: (a) Population unable to keep home adequately warm below 60% of median equivalized income in 2023. Source: Eurostat (sdg_07_60); (b) Total cooling and heating degree days by country in 2023. Source: own study, created using Eurostat (nrg_chdd_a).

Figure 2. Causes, factors, and dimensions of energy poverty. Source: own study.

Table 1. Timeline of main EU regulations addressing EP.

Year	Regulation	Legal Reference Document	Main Focus
2018	Renewable Energy Directive (RED II)	(Directive (EU) 2018/2001)	Promoting renewable energy adoption and addressing energy poverty through access to clean energy.
2018	Energy Efficiency Directive (EED)	(Directive (EU) 2018/2002)	Improving energy efficiency and prioritizing vulnerable groups in energy-saving measures.
2019	Clean Energy for All Europeans Package		Establishing a fair energy market, with provisions to protect vulnerable consumers and define energy poverty.
2019	European Green Deal	(COM/2019/640 final)	Achieving climate neutrality by 2050, with measures to tackle energy poverty through investments in clean energy.
2020	Just Transition Mechanism Just Transition Fund	(COM/2020/22 final) (Regulation (EU) 2021/1056)	Supporting regions and communities most affected by the transition to a low-carbon economy.
2021	Recovery and Resilience Facility (RRF)	(Regulation (EU) 2021/241)	Facilitating post-COVID recovery, with a focus on green transitions and addressing energy poverty.
2021	European Pillar of Social Rights Action Plan	(COM/2021/102 final)	Promoting social fairness, equal access to essential services, and energy poverty reduction.
2022	REPowerEU Plan	(COM/2022/230 final)	Reducing dependency on Russian fossil fuels and addressing energy poverty through energy diversification and safety.
2023	Commission Recommendation (EU) 2023/2407 of 20 October 2023 on energy poverty	(EU) 2023/2407	Guidelines for EU member states to enhance the identification, monitoring, and mitigation of energy poverty, emphasizing the need for targeted measures to protect vulnerable consumers and promote energy efficiency.

Table 2. Areas of vulnerability to EP following guidelines from EU initiatives.

Reference	Macro Area of Vulnerability
(Introduction to the Energy Advisory Hub (EPAH) Handbooks: A Guide to Understanding and Addressing Poverty, 2022)	Socio-demographic factors Household composition Health Energy literacy Cultural
[33]	Climate Facilities/housing Mobility Socio-economic aspects
[34]	Climate Facilities/housing Mobility Socio-economic Policy and regulatory framework Participation/awareness raising
[35]	Physical infrastructure Policy interventions Demographics

Table 3. EP vulnerabilities. Source: Own Study.

Reference	Vulnerabilities
[3]	access, affordability, flexibility, energy efficiency, needs, practices
[38]	environmental conditions; cultural norms and meanings; institutional rules and expectations
[27]	available infrastructure, energy efficiency, social and economic poverty, and well-being and health
[39]	household composition, educational attainment, labor force status, energy-inefficient housing, heating system in place
[36]	physical, socio-economic, climatic

Table 5. Proposed indicators of energy poverty. Source: own study.

Indicator Name	Description
Objective approach
Poor technical condition of the building	A household is considered to be living in a building in poor condition if there is a leaking roof, rotting window frames or floors, damp walls or foundations
Low Income/High Costs Index (10 and 25%threshold)	Percentage of households spending more than 10% or more than 25% of their income to meet their energy needs
Percentage of households in debt for energy bills	Applies to the debt for the current period’s fee to the energy supplier
Subjective approach
High energy costs	Households’ declarations that they consider their energy bills to be high. It is possible to conduct analyses with a greater level of detail, analyzing individual media and heat sources
Trouble paying bills	Household declarations about problems with paying energy bills
Insufficient thermal comfort (with possible division into seasons, depending on weather conditions and related needs)	Households declare that thermal comfort is below individual needs
Experiencing negative health effects caused by inappropriate temperature in the apartment	Household declarations of negative physical and mental health effects considered to be caused by inappropriate temperature in living spaces. It is possible to conduct a more detailed analysis, analyzing individual types of temperature-related diseases
Related to the strategies undertaken by households
Consensual (narrow approach)	In order to make ends meet, households must adopt a strategy of reducing energy needs to an absolute minimum, heating only the room in which they sleep
Consensual (wide approach)	In order to make ends meet, households must adopt a strategy of reducing their energy needs to a level they consider economical

Table 6. Conceptual framework of energy poverty. Source: own study.

Dimension	Determinants	Description
Political	Regulations, laws, and public policies related to energy, social policy, and ecology	Government decisions and actions by institutions that impact energy costs, the availability of support for individuals in financial difficulty, as well as energy efficiency strategies and environmental goals. Occurs at every level of governance
Economic	Energy costs Financial situation of households	Income, energy expenditures, and their share in overall costs. External causes are also significant, as the household’s sensitivity to changes in energy prices, inflation, and the overall state of the economy
Health	The impact of energy poverty on physical and mental health	Inadequate heating or cooling in homes can lead to health issues such as respiratory diseases, heart problems, and a general decline in health. Additionally, the stress associated with high energy costs and concerns about the ability to pay bills can negatively affect mental health, leading to depression, anxiety, and a decrease in overall well-being. Increased energy demand of individuals with health problems, including the elderly. One of the symptoms of energy poverty is also poor ventilation. This results from the lack of opportunities to upgrade and maintain ventilation systems, leading to the accumulation of air pollutants
Infrastructural	Quality of housing infrastructure	Quality of housing infrastructure, such as the condition of buildings and apartments, the presence of damage and lack of insulation, and inefficient or broken heating sources. Poor-quality or outdated infrastructure can lead to higher energy costs and limited access to energy, which in turn affects energy poverty
Social	Groups particularly at risk of poverty and social exclusion	Focus on groups that are especially vulnerable to poverty and social exclusion, such as the elderly, individuals with disabilities, families with children, and single individuals. These groups often have limited financial resources, making them more susceptible to difficulties in paying for energy
Energy transfer	Availability of energy infrastructure and energy losses	Accessibility of connections to energy networks, which affects households’ ability to utilize electricity, cooling and heating, and other energy sources. High energy losses through the building envelope due to poor insulation can lead to increased energy costs and limited availability for users
Climate	Environmental impacts of using highly pollutant energy sources	Households that rely on cheap and more polluting energy sources contribute to the emission of harmful substances. These practices not only negatively affect air quality but also have consequences for the health of residents, leading to health issues related to pollution. Greenhouse gas emissions associated with the use of highly pollutant energy sources have a negative impact on climate change, which can lead to further consequences for society and the economy

Table 7. Attributes and interconnected dimensions of EP.

Attribute	Interconnected Dimensions
Causes	Politics, Economics, Infrastructure, Social, Energy Transfer, Climate and Environment
Vulnerabilities	Health, Economics, Infrastructure, Social, Energy Transfer, Climate and Environment
Transitional state	Politics, Infrastructure, Social, Energy Transfer, Climate and Environment
Consequences	Politics, Economics, Health, Climate and Environment

Table 8. Determinants of energy poverty. Source: own study.

Dimension	Causes	Vulnerabilities	Transitional State	Consequences
Politics	Inadequate policies, subsidies, and ineffective regulatory actions	Unequal distribution of resources	Policy shifts during energy transitions	Energy insecurity and lack of affordable access
Economics	Low income, rising energy costs, unemployment	Employment insecurity, irregular income	Economic growth policies targeting low-income households	Financial stress, reduced quality of life
Health	Insufficient thermal comfort and air quality within the household	Vulnerable groups (elderly, children, those with medical conditions)	Taking individual strategies for heating, cooling, and ventilation	Health issues (physical and mental), increased healthcare costs
Infrastructure	Poor-quality housing, lack of energy-efficient technologies	Poor energy infrastructure, rural areas with inadequate access	Upgrading infrastructure (e.g., retrofitting, renewable installations)	Higher energy consumption and costs, worsened living conditions
Social	Low education, lack of awareness, social exclusion	Single-parent households, elderly living alone, marginalized groups	Social programs, public awareness campaigns, community support interventions	Social exclusion, lack of social support
Energy transfer	Inefficient energy distribution, market monopolies	Weak energy grids, poor energy infrastructure, frequent energy outages	Development of decentralized systems (e.g., community solar, micro-grids)	Energy scarcity, increased dependency, frequent outages
Climate and environment	Increased energy needs due to extreme weather, infrastructure damage from climate events	Regions prone to extreme weather, lacking adaptation capacities	Climate adaptation and mitigation policies, promoting green energy	Exposure to temperature extremes, perpetuated cycle of energy poverty

Table 9. Suggested indicators from the Eurostat database. Source: own study.

EP Dimension	Suggested Indicator	Database
Political dimension	Trust in institutions and public services (qol_gov_ins) Level of trust by sex, age, educational attainment, and domain Active citizenship Persons participating in formal/informal voluntary activities or active citizenship by sex, age, educational attainment, policies, and subsidies Government expenditure on social protection (% of GDP) Energy taxes as a % of total taxes	ilc_pw03b (qol_gov_cit) ilc_scp19 gov_10a_exp nama_10_gdp
Economic dimension	Relation of Gas prices for household consumers (nrg_pc_202) to Mean income by age and sex (ilc_di03) Housing cost overburden rate by age, sex, and poverty status At-risk-of-poverty rate Share of energy costs in household consumption expenditures	nrg_pc_202, ilc_di03 ilc_lvho07a ilc_li02 hbs_exp_t112
Health dimension	Premature deaths due to exposure to fine particulate matter (PM2.5) Increase in excess mortality in the winter months Self-reported unmet need for medical care due to costs	sdg_11_52 demo_mexrt hlth_silc_08
Infrastructural dimension	Total population living in a dwelling with a leaking roof, damp walls, floors or foundation, or rot in window frames or floor Dwellings with leaking roofs, damp walls, floors or foundation, or rot in window frames or floors—ilc_mdho01 Percentage of households with arrears on utility bills	ilc_mdho01 ilc_mdes06
Social dimension	Population unable to keep home adequately warm because of poverty status Severe material deprivation rate	sdg_07_60 ilc_mddd11
Energy transfer dimension	Complete energy balances—Distribution losses Final energy consumption in households per capita Energy dependency rate	nrg_bal_c nrg_d_hhq tsdcc310
Climate and environmental dimension	Air emission footprints (domestic technology assumption)—Final consumption expenditure by households from electricity, gas, steam, and air conditioning Total Cooling and heating degree days by country Greenhouse gas emissions per capita Population living in areas with pollution levels exceeding EU air quality standards	env_ac_io10 nrg_chdd_a env_air_gge env_ac_aqne

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Szczygieł, O.; Harbiankova, A.; Manso, M. Where Does Energy Poverty End and Where Does It Begin? A Review of Dimensions, Determinants and Impacts on Households. Energies 2024, 17, 6429. https://doi.org/10.3390/en17246429

AMA Style

Szczygieł O, Harbiankova A, Manso M. Where Does Energy Poverty End and Where Does It Begin? A Review of Dimensions, Determinants and Impacts on Households. Energies. 2024; 17(24):6429. https://doi.org/10.3390/en17246429

Chicago/Turabian Style

Szczygieł, Oskar, Alena Harbiankova, and Maria Manso. 2024. "Where Does Energy Poverty End and Where Does It Begin? A Review of Dimensions, Determinants and Impacts on Households" Energies 17, no. 24: 6429. https://doi.org/10.3390/en17246429

APA Style

Szczygieł, O., Harbiankova, A., & Manso, M. (2024). Where Does Energy Poverty End and Where Does It Begin? A Review of Dimensions, Determinants and Impacts on Households. Energies, 17(24), 6429. https://doi.org/10.3390/en17246429

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