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INSIGHT E Report Policy Report May 2015 2 Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and measures Lead Authors: Steve Pye (UCL), Audrey Dobbins (USTUTT) Authoring Team: Claire Baffert (KIC InnoEnergy) Jurica Brajković, Ivana Grgurev (EIHP) Rocco De Miglio (E4SMA) Paul Deane (UCC) Reviewers: Bruno Lapillonne (Enerdata) Carine Sebi (Enerdata) Legal notice: Responsibility for the information and views set out in this report lies entirely with the authors. This report is also available on our website: www.insightenergy.org Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and 2 measures Policy Report ii Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and 2 measures Policy Report ABOUT INSIGHT_E INSIGHT_E is a multidisciplinary energy think tank which provides the European Commission and other energy stakeholders with advice on policy options and assesses their potential impact. The INSIGHT_E consortium is formed by twelve complementary partners representing various sectors: academia, research centres, consultancies, one think tank, one stakeholder organization and one of the Knowledge and Innovation Community of the European Institute of Technology. Our partners are based in ten European countries. This sectoral and geographical diversity is also reflected in the thematic scope of INSIGHT_E, ranging from energy infrastructure, new energy technologies to economic analysis, geopolitics and trade, environmental and climate impact, and social and behavioral change. To receive regular updates about INSIGHT_E programme of work and to learn more about participation opportunities, please visit the following links: Website: www.insightenergy.org Contact us: [email protected] Follow us on: Facebook & LinkedIn: Insight Energy and on Twitter: INSIGHT_E@EuropeEnergy Institut Français des Enerdata Relations internationales Energy Institute Paul Scherrer Institute "Hrvoje Pozar" Energy Engineering Economic Environment Stakeholder Forum for Systems Modeling And a Sustainable Future Analysis SRL KIC InnoEnergy University of Stuttgart Karlsruhe Institute for University College Cork Technology KTH Royal Institute of University College Technology London iii Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and 2 measures Policy Report TABLE OF CONTENTS Executive Summary ............................................................................................................... v List of Figures .......................................................................................................................ix List of Tables ........................................................................................................................ x Case Studies .........................................................................................................................xi Acronyms ............................................................................................................................ xii Country Abbreviations used .................................................................................................. xiii Acknowledgements .............................................................................................................. xiv I. Introduction ...................................................................................................................... 1 II. EU efforts in addressing energy poverty ............................................................................... 3 II.A. European legislation .................................................................................................... 4 II.B. Current status of action ............................................................................................... 6 III. Vulnerable consumers and energy poverty in the EU ............................................................ 9 III.A. Indicators for EU energy poverty analysis ..................................................................... 9 III.B. EU research initiatives on energy poverty ................................................................... 17 IV. Member State review ...................................................................................................... 26 IV.A. Member State approaches to addressing the issues ...................................................... 26 IV.B. Measures to protect vulnerable consumers and tackle energy poverty ............................. 44 IV.C. Key findings from Member State review ...................................................................... 57 V. Recommendations ........................................................................................................... 62 VI. References .................................................................................................................... 72 Appendices ......................................................................................................................... 77 Appendix I. Vulnerable Consumers and Energy Poverty in Member States: Country summaries .. 77 Appendix II. Vulnerable Consumers and Energy Poverty in Member States: Country reports ...... 77 Appendix III. European Stakeholders for Energy Poverty ....................................................... 77 Appendix IV. European Energy Poverty Research Initiatives ................................................... 77 iv Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and 2 measures Policy Report EXECUTIVE SUMMARY Energy poverty, often defined as a situation vulnerable consumers, and the measures that where individuals or households are not able have been implemented to address these to adequately heat or provide other required issues. Under the Third Energy Package, energy services in their homes at affordable Member States need to identify vulnerable cost, is a problem across many Member consumers and put measures in place that States. This is due to rising energy prices, affords them adequate attention, and where recessionary impacts on national and regional appropriate, address issues of energy poverty. economies, and poor energy efficient homes. The EU Survey on Income and Living Key findings: definitions Conditions (EU SILC) estimates that 54 million . Definitions used for vulnerable consumers vary European citizens (10.8% of the EU significantly across Member States, reflecting population) were unable to keep their home differences in problem identification and in approaches to action. adequately warm in 2012, with similar numbers being reported with regard to the . Less than a third of Member States explicitly recognise concepts of energy poverty. Those late payment of utility bills or presence of poor that do see it as a linked yet distinctive housing conditions. Based on these proxy problem from vulnerable consumer protection. indicators, a particularly pervasive problem is highlighted in Central Eastern European and Southern Europe Member States. Our review highlights the quite distinctive ways in which Member States have both It is important that Member States recognise recognised and chosen to address the issues and address this problem, as ensuring basic of vulnerable consumers and energy poverty. energy services is critical to ensure that While this strong subsidiarity approach communities do not suffer negative health recognises national differences, it means there impacts, do not become further entrenched in is a danger of Member States not addressing poverty, can maintain a good quality of life, as the dual challenges of additional consumer well as ensuring the financial outlay to assist protection and access to the markets for households that require support does not vulnerable consumers, and energy become too burdensome. While allowing for affordability concerns. There is also a risk of full competition in energy markets, vulnerable consumer actions not being aligned Governments and regulators have a role to with or contributing to measures to address protect the most vulnerable communities, and energy poverty. prevent groups in society falling into energy poverty. The functioning of energy markets The report also highlights that energy poverty can clearly have an impact on this situation, is a linked yet distinctive issue from vulnerable through ensuring consumer protection and consumers, and requires different metrics to safeguards, offering competitive tariffs (and define it and measures to tackle it. We access to them) and assisting in the efficient estimate that less than a third of Member use of energy. States recognise energy poverty at an official level, while only four countries have legislated This policy report from the INSIGHT_E definitions (UK, Ireland, France, Cyprus). consortium assesses how Member States However, it should be noted that many define the issue of energy poverty and v Energy poverty and vulnerable consumers in the energy sector across the EU: analysis of policies and 2 measures Policy Report countries do have civic organisations engaged . Energy efficiency measures, in trying to tackle the problem in local particularly those focusing on building retrofit, are a key part of a strategy to communities around Europe. The study also address energy poverty. There is highlights that energy poverty is not only a considerable scope for increased targeting regulated energy markets issue;
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