The Dynamics of Energy Poverty: Evidence from Spain

Reducing the proportion of households defined as energy poor is an increasingly important policy objective. This paper uses longitudinal data to examine the level and dynamics of energy poverty in Spain, comparing the results to the level and dynamics of income poverty. Two alternative measures of energy poverty are used in the analysis – one based on energy expenditure, the other reflecting an individual’s perceptions of difficulty in heating their home, paying utility bills and housing condition. The proportion of those in income poverty and also in energy poverty is relatively low suggesting a need for specific as opposed to general measures to address the latter. In relation to the dynamics of energy poverty, at the aggregate level there is a substantially greater movement out of expenditure-based energy poverty relative to subjective energy poverty and income poverty while the rate of re-entry into poverty was highest for the subjective energy poverty measure. The analysis also provides evidence of duration dependence in energy poverty. The results show clearly how mitigating expenditure behaviour reduces the level and alters the dynamics of expenditure-based energy poverty compared to subjective energy poverty. The implications for designing, targeting and monitoring energy policy are considered.