Addressing energy poverty

The fact that energy poverty rates in the Energy Community are among the highest in Europe was a starting point of the study. This is due to historical economic and infrastructural factors, paired with social and energy sector reforms during the post-communist transition. Energy poverty was further worsened by the COVID-19 pandemic, leading to increased unemployment, reduced household incomes, and rising energy demand in the region – all factors contributing to energy poverty.

Published in December 2021, the final report:

  • Assesses the existing Contracting Party legal frameworks on energy poverty;
  • Identifies policies and resources supporting energy vulnerable / poor households;
  • Proposes a definition of energy poverty;
  • Analyzes the drivers of energy poverty in each Contracting Party;
  • Formulates possible indicators to measure aggregate energy poverty;
  • Proposes measures to support the energy poor.

Download the report

Poverty study

Preliminary assessment of share of households in poverty 

 Study findings by Contracting Parties

  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    The definition in place identifies energy vulnerable consumers on the basis of income and health criteria. It facilitates the identification of the most vulnerable households but fails to cover other households that might be suffering from energy poverty due to other reasons. The study proposes that the authorities adopt a definition of energy poverty, together with accompanying indicators that quantify the extent of energy poverty and enable measures resulting in long-term alleviation of energy poverty.

    In North Macedonia, three types of measures cover energy-poor and vulnerable households. The first measure is a subsidy for households with vulnerable electricity and natural gas consumer(s) fulfilling the following criteria:

    • Users of guaranteed minimum assistance earning a cash benefit to cover part of household energy consumption costs, and
    • Persons facing social risk (motherhood, illness, old age, injury, and disability).

    Furthermore, another condition includes meeting an electricity consumption limit (maximum of 3600 kW), connection power, and supply by the universal supplier. Regarding natural gas, a household must meet the following conditions:

    • Gas is to be supplied from a supplier obliged to supply natural gas as a public service, and
    • Annual natural gas consumption for the period October-March must not exceed 70 cubic meters.

    The energy consumption limit in the measure stimulates energy consumption savings but does not directly stimulate energy efficiency.

    The second measures involve co-financing energy efficiency and small renewable energy applications, such as solar thermal collector systems, energy-efficient windows and doors, biomass pellet stoves, and small roof-integrated PV power plants. The criteria for beneficiaries of this measure are vulnerable consumers and particularly the following categories:

    • Employed low-income persons or an employed spouse where the monthly family income does not exceed a net income of 486 EUR.
    • Retired low-income persons or a retired spouse where their monthly family income does not exceed a net income of 324 EUR.
    • Vulnerable consumers as defined in the 2021 Program for Protecting vulnerable energy consumers.

    These measures contribute directly to energy efficiency and alleviation of long-term energy poverty. They also mitigate climate change by reducing CO2 emissions from household energy consumption.

    The third type of measure is defined in the obligations of energy suppliers toward vulnerable consumers such as their right to utilize some of the protection measures; notice of planned disconnection from the grid due to unpaid invoices, at least 40 days before the actual disconnection; supplying natural gas to vulnerable consumers during December -February, despite unpaid invoices for delivered natural gas; supplying natural gas to vulnerable consumers, despite unpaid invoices for delivered energy, if no more than 60 days have passed from the invoice maturity date and the possibility of delayed payment or payment of the debt in instalments, where debt repayment shall be made in at least six equal instalments, for which a settlement is concluded with the vulnerable consumer.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The North Macedonian Statistics Office conducts the EU SILC and HBS surveys and the study proposes to use them in estimating and monitoring the number of energy-poor households in North Macedonia. Unfortunately, the consultant did not receive the required microdata and hence was not able to estimate the number of energy-poor households based on North Macedonian data. Therefore, only a rough estimate has been made. 

    33% of all households in North Macedonia declare that they cannot keep their homes adequately warm. Given that the study has proposed to use the share of households unable to keep their homes adequately warm that belong to the first four deciles as a lower bound indicator, and that the reported 33% represents all households, the value of 33% can be considered an upper bound for the estimated number of energy poor households in North Macedonia. Therefore, the estimated upper bound for the number of energy poor households in North Macedonia is 237 000. Due to the lack of micro data, it is not possible to estimate the lower bound of the number of energy poor households in North Macedonia.
     

  • Policy recommendations

    Policy recommendations

    With its definition of energy vulnerable consumers and legislation in place, North Macedonia has taken significant steps in protecting the vulnerable consumers. Its legislation recognizes the issue of energy vulnerability and the necessity of offering protection. Long-term measures are defined in the Program for Promotion of Renewable Energy Sources and Encouragement of Energy Efficiency in Household, alleviating energy poverty.

    North Macedonia has long-term measures concerning vulnerable consumers in the field of energy efficiency.  As these measures are also beneficial for the general public, they should be further assessed in the NECP and other strategic documents aimed at improving energy efficiency in North Macedonia.

    • Program for mitigating energy poverty.
      There are annual programs, but they do not appear to have a long-term perspective to address energy poverty in North Macedonia. Therefore, the study proposes drafting and adopting a formal document that identifies a detailed plan for implementing the measure to address energy poverty. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households. It should also be further described in the NECP, with clear eligibility criteria.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes. The study proposes measures aimed at improving the energy efficiency of homes, hence reducing energy demand.
    • Replacement of household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
      This measure is covered in the annual Program for Promotion of Renewable Energy Sources and Encouragement of Energy Efficiency in Household, but should also be further assessed in the NECP, with a larger subsidy percentage (the current subsidy is 70% for low-income persons).

     

  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    The current legislative framework in Albania addresses the issue of vulnerable consumers who are entitled to support. Vulnerability in the current framework refers to a disability, health, and income status. Though the current definition benefits the most vulnerable members of society, it still fails to capture the broader aspects of energy poverty. The study proposes that Albania revises its definition of energy poverty so that the authorities can measure the extent of energy poverty, and pursues measures resulting in long-term alleviation of energy poverty.

    Two types of financial measures at national level are offered to vulnerable consumers (households in need) related to electricity expenses. Target groups for both measures are families receiving social assistance (social payments), disability allowance beneficiaries, old-age pensioners, paraplegics and tetraplegics, and low-income families with a monthly income below 35,000 ALL (EUR 283) per month.

    The measures are general, and gender is not considered. Both measures are not expected to tackle behavioral change or small investments from beneficiaries, an approach that would increase energy efficiency, while decreasing energy consumption and subsequent greenhouse emissions from energy sources. Current measures represent short-term aid to energy-poor households and are not considered a possible solution to alleviating energy poverty. The total amount of financial support provided to applicants in the implementation interval from 2006 to today is EUR 15 million.
     

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    INSTAT conducts surveys such as the EU SILC and HBS which are proposed for estimating and monitoring the number of energy-poor households in Albania. As no microdata was provided, only a rough estimate can be made based on the publicly available data.

    37% of all households in Albania declare they cannot keep their homes adequately warm. Given that it is generally proposed to use the share of households unable to keep their homes adequately warm that belong to the first four deciles as a lower bound indicator, and that the reported 37% represents all households, the value of 37% can be considered an upper bound for the estimated number of energy poor households in Albania.  Therefore, the estimated upper bound for the number of energy poor households in Albania is 272,000. Due to lack of data, it is not possible to estimate the lower bound of the number of energy poor households in Albania.

  • Policy recommendations

    Policy recommendations

    With its definition of energy vulnerable consumers and legislation in place, Albania has taken the first important step in protecting the most vulnerable consumers. However, no long-term measures have been designed for alleviating energy poverty and further improvements can be made in protection measures and direct support. Albania is currently in the process of drafting the National Energy and Climate Plan (NECP) which should deliver an  implementation plan for alleviating energy poverty and reviewing the definition of vulnerable consumers.

    When mitigating energy poverty, Albania should improve the energy efficiency of the dwellings of energy-poor households and enable fuel switching and heating system improvements, primarily for those households relying on unsustainable fuelwood. The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty.

    The proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Albania.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    Bosnia and Herzegovina has measures in place that are aimed at providing assistance in covering electricity and gas costs for the most vulnerable consumers. The current definition uses income and disability as the principal criteria for addressing the issue of energy vulnerability. Current measures are targeted towards the most vulnerable members of society and as such, they do not address the broader issue of energy poverty. The study proposes for Bosnia and Herzegovina to revise its definition of energy poverty so that the authorities can measure the extent of energy poverty, and pursue measures resulting in long-term alleviation of energy poverty.

    Direct financial support in Federation of Bosnia and Herzegovina is provided to households for the purpose of reducing household electricity costs. Eligibility criteria include the amount of monthly electricity consumption and whether the person is a beneficiary of the minimum guaranteed financial support. The total number of beneficiaries from 2011-2019 was 67,936. This measure provides financial relief to vulnerable households, but does not contribute to energy efficiency improvements and, therefore, does not eliminate the major causes of energy poverty.

    The second measure, available only to the population residing in the capital of Bosnia and Herzegovina, subsidizes electricity, natural gas, and district heating in the Sarajevo Canton, therefore, it only has a local impact. 

    As with the first measure, the second measure does not improve energy efficiency, but provides some relief for the financial burden of household energy consumption. In conclusion, the measures in place have a limited scope and target group (targeting only the most vulnerable groups). They are insufficient in alleviating energy poverty in Bosnia and Herzegovina.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, we propose using an upper and lower bound for the number of energy-poor households. The lower bound is used for the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The Agency for Statistics of Bosnia and Herzegovina does not carry out EU SILC surveys. Therefore, the Consultant has suggested conducting the survey in Bosnia and Herzegovina as it would allow for precisely estimating the number of energy-poor households. At the same time, the Agency for Statistics of Bosnia and Herzegovina conducts the HBS but unfortunately, the Consultant has not received the required microdata. Accordingly, the Consultant was not able to estimate the prevalence of energy poverty in households in Bosnia and Herzegovina. Furthermore, due to the lack of relevant publicly available statistical information, the Consultant was not able to even make a rough estimate of the number of energy poor households in Bosnia and Herzegovina. 

     

  • Policy recommendations

    Policy recommendations

    Bosnia and Herzegovina has made some progress in protecting the energy vulnerable groups and mitigating energy poverty. The progress has however not been comparable across entities. Furthermore, the measures that are in place are focused on direct financial support only and target only the most vulnerable groups – recipients of different social welfare benefits.

    When mitigating energy poverty, Bosnia and Herzegovina should improve the energy efficiency of the dwellings of energy-poor households and enable fuel switching and heating system improvements, primarily for those households relying on unsustainable fuelwood. The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty.

    Proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Bosnia and Herzegovina.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    Georgia's definition of vulnerability relates primarily to household socioeconomic status. This allows the authorities to assist the most vulnerable members of society. The study proposes Georgia to develop a definition of energy poverty. Such a definition would allow the authorities to identify the extent of energy poverty in aspects other than income, resulting in policies and measures to alleviate energy poverty and providing long-term support to households.

    A total of 7 measures were identified in Georgia, as an energy expenses aid to households in need. Two measures  aim specifically at the reduction of household electricity costs; through a direct subsidy in the form of a tariff subsidy. Other measures include subsidies to socially vulnerable households and they cover electricity, waste disposal, communal service, and water supply costs. Criteria for all measures are set using the rating score. Some measures are targeting specific groups such as households in the high mountainous regions, residents living in the villages near the occupied area, or families with four or more children.

    Due to special situation caused by Covid-19, subsidies for electricity, natural gas, drinking water, and sewage are implemented for households that consume 200 kWh or less electricity per month and 200 m3 or less natural gas per reporting month. Although some measures stimulate an energy consumption decrease, they are not expected to directly stimulate energy efficiency. All the measures represent short-term aid to energy-poor households and are not considered as a possible solution to alleviate energy poverty.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The National Statistics Office of Georgia conducts the Household Income and Expenditure Survey (HIES) which can be viewed as the Household Budget Survey (HBS). Despite their similarities, the suggestion is to conduct the survey strictly in line with the EUROSTAT methodology for HBS, making sure it is comparable to the HBSs of other CPs. Furthermore, the EU SILC survey has not been conducted in Georgia. The recommendation is that the survey be conducted also in line with the EUROSTAT methodology.

    The available data for Georgia based on HIES provides the basis for calculating the upper bound value for energy poor households which is estimated at 24.6%.  Due to the lack of data, the lower bound cannot be estimated. Therefore, the estimated absolute number of energy poor households in Georgia is 274,000 households, which represents an upper bound.

  • Policy recommendations

    Policy recommendations

    The issue of energy affordability and energy poverty are issues that have been recognized by the Georgian authorities, and some initiatives are already in place that provide suggestions on how to address the energy poverty issue. Georgia has put in place several measures to aid vulnerable consumers, all of which are intended to reduce
    the energy burden.

    When mitigating energy poverty, Georgia should improve the energy efficiency of the dwellings of energy-poor households and enable fuel switching and heating system improvements, primarily for those households relying on unsustainable fuelwood. The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty.

    The proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Georgia. It is recommended to draft and adopt a formal document that defines a detailed plan for implementing measures to address energy poverty. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    Kosovo* has only a general definition of consumers in need without precise criteria and established measures. The study proposes adoption of a definition on energy poverty that allows the authorities to measure the extent of energy poverty and to pursue measures to alleviate it.

    Measures provided in the corresponding Kosovo* legal acts rely on the following information:

    1. Process of implementing electricity subsidies

    Inputs and clarifications are received from the Ministry of Labour and Social Welfare (MLSW). During the reporting period, a cooperation agreement was established between the former Ministry of Finance and Transfers (MFT), the Kosovo* Electricity Distribution and Supply Company (KEDS) and the Kosovo* Electricity Supply Company (KESCO), in order to subsidize electricity for families benefiting from the Social Assistance Scheme (SNS), Martyrs’ Families and War Invalids Scheme (FDIL), Blind Persons Scheme (SPV) and the Paraplegic and Tetraplegic Scheme (SPPT) for 2019. The agreement was reached on 2 June 2020.

    EUR 4.5 million were allocated under the Agreement. The number of beneficiaries include 36,648 families, with 23,316 families from the SNS, 10,314 families from the FDIL scheme, 967 families from the SPV scheme and 1,953 families from the SPPT scheme. EUR 4,470,619 were spent for the first part, and the remaining EUR 29,381 for complaints. This activity has been completed.

    2. Additional action/process 

    A working group was established at MLSW in 2019 to devise and develop the program Protection of Consumers in Need. The group is led by the MLSW representative and the Energy Regulatory Office (ERO) representative as well as participants from other relevant Kosovo* institutions. The Working Group in 2020 was supported by the expertise of the World Bank. Accordingly, a study was conducted by the World Bank, which assisted the working group in devising the protection program for consumers in need. In 2020, the MLSW, as the responsible stakeholder, was assisted by the World Bank which provided local expertise in drafting the mentioned program document. The working group continues to support the MLSW until the finalization of this document, where after the public consultation procedure, it will be further processed by the MLSW for approval by the Government.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The Kosovo Agency of Statistics conducts the EU SILC and HBS surveys which are proposed for estimating and monitoring the number of energy-poor households in Kosovo*. Unfortunately, the consultant did not receive the required microdata, thus was not able to estimate the number of energy-poor households in Kosovo* based on Kosovo* data. Therefore, only a rough estimate can be made based on the publicly available data.

    40% of all households in Kosovo* declare they cannot keep their homes adequately warm. Given that the authors of the study have proposed to use the share of households unable to keep their homes adequately warm that belong to the first four deciles as a lower bound indicator, and that the reported 40% represents all households, the value of 40% can be considered an upper bound for the estimated number of energy poor households in Kosovo*. Therefore, the estimated upper bound for the number of energy poor households in Kosovo* is 133,000. Due to the lack of micro data, it is not possible to estimate the lower bound of the number of energy poor households in Kosovo*.

  • Policy recommendations

    Policy recommendations

    Kosovo* has only introduced the concept of vulnerable consumers in the primary legation without putting significant measures in place. There is solely one recent measure that provides direct financial assistance to certain categories of socially vulnerable consumers. There are no measures in place that would tackle the structural issue of energy poverty.

    When mitigating energy poverty, Kosovo* should improve the energy efficiency of the dwellings of energy-poor households and enable fuel switching and heating system improvements, primarily for those households relying on unsustainable fuelwood. The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty.

    Proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Kosovo*. It is recommended to draft and adopt a formal document that defines a detailed plan for implementing measures to address energy poverty. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    The current definition developed according to the Natural Gas and Electricity Act defines vulnerable consumers  in the context of social policy. This definition targets the most vulnerable households but fails to identify energy-poor consumers. The study proposes that the authorities adopt a definition of energy poverty, which allows for identification of energy-poor households and quantification of the issue. The authorities would subsequently be in a position to develop policies and measures to aid those energy-poor households but do not necessarily fall under the current policy framework.

    In Moldova, two types of national measures and a local measure are offered to households in need for the purpose of subsidizing energy expenses. National measures are described as social assistance programs and cover the poorest families using income as a criterion and heating-related social programs as complementary to social assistance.

    The local measure is a subsidy for heating costs in Chisinau and Balti. The identified measures are not expected to tackle behavioral change or small investments by beneficiaries, which would otherwise increase energy efficiency and decrease energy consumption, and subsequently greenhouse emissions from energy sources. Current measures represent short-term aid to energy-poor households and are not considered a possible solution to alleviating energy poverty.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound we used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The NBS does not conduct the EU SILC survey. The study suggests to conduct a survey in Moldova in order to precisely estimate the number of energy-poor households.

    The NBS conducts the HBS. Unfortunately, the consultant did not receive the required Moldovan microdata and hence was not able to estimate the number of energy-poor households based on Moldova data. The official NBS website does not contain any other data. It therefore was not possible to make even a rough estimate on the number of energy poor households in Moldova.

  • Policy recommendations

    Policy recommendations

    Moldova has made some progress in protecting the energy vulnerable and mitigating energy poverty. The short-term measures in place focus on direct financial support. Given the lack of energy resources, the short-term support measures paired with low energy efficiency of dwellings, there is a pressing need to improve energy efficiency of energy-poor and energy vulnerable homes.

    When mitigating energy poverty, Moldova should improve the energy efficiency of the dwellings of energy-poor households and enable fuel switching and heating system improvements, primarily for those households relying on unsustainable fuelwood. The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty.

    The proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Moldova. It is recommended to draft and adopt a formal document that defines a detailed plan for implementing measures to address energy poverty. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    There is a definition of energy vulnerable consumers in place.  It refers to vulnerability stemming from the health and social status. This approach provides support to the most vulnerable members of society, nevertheless, it fails to capture the broader context of energy poverty. The study proposes that authorities adopt a definition of energy poverty that enables it to measure energy poverty and pursue measures resulting in long-term alleviation of energy poverty.

    There are two identified financial measures at the national level offered to socially vulnerable households for electricity expenses. Both are based on subsidies for electricity bills with eligibility criteria for 2 groups of consumers:

    • First group:
      Vulnerable consumers based on the social and health status of household members who exercise their right to receive material welfare support and assistance for domestic care and support, or disability support are entitled to a subsidy covering 50% of their electricity bill for a maximum of 600 kWh of consumed electricity.
    • Second group:
      Socially vulnerable households that exercise their right to receive material welfare support are also considered vulnerable consumers and are eligible for a subsidy covering 40% their electricity bill for bills up to 60 EUR. For bills higher than 60 EUR, the subsidy is 24 EUR. Beneficiaries receiving disability support are eligible for a subsidy covering 30% of their bills up to 60 EUR, whereas bills higher than 60 EUR means that the subsidy is 18 EUR.

    Measures for protecting energy vulnerable consumers in Montenegro are currently limited to direct financial support and prohibiting the halting of electricity supplies to vulnerable customers. Though these measures do offer some financial relief to the most vulnerable groups, they are exceptionally limited in alleviating the main effects of energy poverty. Such measures do not contribute to improving the quality of energy services, and do not contribute to reducing CO2 emissions and protecting the environment. The eligibility criteria currently set up offer a good starting point in alleviating energy poverty; however, such criteria are narrow and limited only to the most vulnerable groups. Current eligibility criteria do not take into consideration gender factors.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    According to available data, the share of energy-poor households ranges between 8% and 15% in Montenegro. This percentage implies that there are between 16 000 and 30 000 energy-poor households in Montenegro.

  • Policy recommendations

    Policy recommendations

    The main approach to mitigating energy poverty in Montenegro should be targeted at improving the energy efficiency of the dwellings of energy-poor households. Due to the specific climate and diversity of the three climate zones in Montenegro, measures should also differentiate across the climate zones. While energy efficiency improvements should be the main measure for all three zones, depending on the zone they should be paired with either heating system improvements with fuel switching (zone with longer and colder winters, depending on traditional, inefficient stoves), or  the provision of cooling systems for those faced with hot and long summers. Also, the use of RES should be considered given the favorable climate in Montenegro.

    The focus should be on measures with a long-term effect in the sense that they contribute to removing the root causes of energy poverty. Proposed measures aim at achieving maximum benefits for the households while easing the national budget burden in the long run.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Montenegro. It is recommended to draft and adopt a formal document that defines a detailed plan for implementing measures to address energy poverty. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes resulting in the inability to heat the entire living surface or not being able to heat homes at all. 
    • Replacement of the household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
      The 4th NEEAP recognizes the development of decentralised energy consumption through prosumers to be beneficial to mitigating energy poverty.
  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    Current definitions of vulnerable consumers given in several legislative acts rely primarily on factors such as health and income level. Although this approach targets the most vulnerable consumers, it still fails to capture other aspects of energy poverty, meaning that some households are not covered by the current definitions. The study proposes that the authorities adopt a definition of energy poverty and accompanying indicators that quantify energy poverty and enable measures resulting in long-term alleviation of energy poverty.

    There are two direct financial support measures on the national level for socially vulnerable households in terms of energy expenses (electricity and gas) and two local measures, and in the form of direct financial support, implemented in Belgrade and Novi Sad.

    Eligibility criteria for coverage by national measures are based on total household income, medical conditions of household members, and situations where a household member’s life or health is at risk due to possibly halting electricity supplies. Measures at the national level provide a deduction for certain quantities of consumed energy depending on the number of household members (consumed 120 to 250 kWh of electricity and 35 to 75 cubic meters of gas). A limit has been set for the maximum subsidized quantity of both electricity and gas.

    Eligibility criteria for local measures in Belgrade include the number of children in a family, the territory where a person is registered, regularly paying utility bill, pensioners receiving the lowest tier of pension payments, low-income households depending on the number of family members, war veterans including those with war disabilities and families of deceased, beneficiaries receiving secured material support and home care meals, as well as households with severe disability and severely ill members. In Novi Sad, the local measure is available to families with three or more children until completion of regular education. The local level measure stipulates bill subsidies of up to 30% of utility bills up to a maximum of RSD 2,400 in Belgrade, and up to 50% of monthly utility bills in Novi Sad.

    These measures provide relief to financial burdens incurred by households for their energy needs, but the measures do not contribute to improving energy efficiency. Current measures represent short-term aid to energy-poor households and are not considered a definite solution to alleviating energy poverty, rather they provide a solid first step in alleviating energy poverty and recognizing energy vulnerability as a problem.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators and applied thresholds, the study proposes using an upper and lower bound for the number of energy-poor households. The lower bound used is the share of households that stated as unable to keep their homes adequately warm. The study determined the upper bound as the share of households that spend twice the national median on energy (2M) and the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, it is possible to capture both types of households -  those that overspend (due to energy inefficient homes) and those who underspend due to lack of sufficient financial resources.

    The share of energy-poor households in Serbia ranges from 7% to 22% of all households. This percentage implies that there are between 176,000 and 529,000 energy-poor households in Serbia. 

  • Policy recommendations

    Policy recommendations

    With its definition of energy vulnerable consumers and legislation in place, Serbia has already taken the first important step in protecting vulnerable consumers. The recently adopted Law on Energy Efficiency and Rational Use of Energy introduces a definition of energy poverty and establishes a new Directorate for financing and promoting energy efficiency. The Directorate has the task to prepare specific programs for the implementation of energy efficiency measures with vulnerable energy customers and other customers with a view to reducing energy poverty.

    The proposals for Serbia aim to improve the energy efficiency of the dwellings of vulnerable and energy-poor households. All the measures have a long-term effect in the sense that they contribute to removing the root causes of energy poverty.  These measures would have a high impact in terms of reducing energy poverty per invested funds.

    • Program for mitigating energy poverty.
      There is no systematic approach to addressing the issue of energy poverty in Serbia. It is recommended to draft and adopt a formal document that defines a detailed plan for implementing the measure to address energy poverty.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes. The study proposes measures aimed at improving the energy efficiency of homes, hence reducing energy demand.
    • Replacement of household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.
    • Renewable energy sources support.
       

     

  • Definition and schemes in place

    Vulnerable consumers definition and schemes in place

    Current definitions of vulnerability are very general, and unlike in other Contracting Parties, specific criteria are lacking. The study proposes that the authorities adopt a definition of energy poverty and accompanying indicators that quantify energy poverty and enable measures resulting in long-term alleviation of energy poverty.

    Three identified measures for energy expenses are offered to socially vulnerable households. The measures covering housing subsidies, various subsidies during the COVID-19 crisis, and abatements are subject to the following criteria: income census, previous subsidies, unemployment, war veterans, labor veterans, citizens affected by the Chernobyl disaster, military service veterans, law enforcement agency veterans, children of war, disabled people, and rehabilitated persons.

    The measures provide financial aid or discounts for the above-mentioned categories of people, reimbursement of housing costs and costs of utility services. Such measures are not expected to tackle behavioral change or small investments from beneficiaries, which would otherwise increase energy efficiency and decrease energy consumption, and subsequently greenhouse emissions from energy sources. Current measures represent short-term aid to energy-poor households and are not considered a possible solution to alleviating energy poverty.

  • Households in energy poverty

    A preliminary assessment of households in energy poverty

    Given that the number of energy-poor households is not exact but depends on the indicators used and thresholds applied, the study uses an upper and lower bound for the number of energy-poor households. The lower bound equals the share of households that declared themselves as unable to keep their homes adequately warm. The upper bound was determined by the share of households that spend twice the national median on energy (2M), including the share of households that spend half the national median on energy (M/2). By combining the 2M and M/2 indicators, the study captures both types of households: those that overspend (due to energy inefficiency of their homes) and those who underspend due to the lack of sufficient financial resources.

    According to the available data, the share of energy-poor households in Ukraine ranges between 13% and 18% of all households. This percentage implies that there are between 1.9 and 2.6 million energy-poor households in Ukraine.

  • Policy recommendations

    Policy recommendations

    Given the dependence on energy imports, further liberalization of the energy market, a complex social support system, and due to the low energy efficiency of dwellings with a significant number of HDD, the necessity of energy efficiency improvements in the homes of the energy-poor and the energy vulnerable is a high priority. Therefore, most of the measures proposed hereafter relate to the long-term measures aimed at improving the energy efficiency of dwellings and reducing the energy needs of households.

    • Program for mitigating energy poverty.
      To ensure a harmonized and coordinated approach, the study proposes drafting and adoption of a formal document that defines a detailed plan for implementing the measures to address energy poverty in the urban and rural areas. The program should extend beyond income support to involve energy efficiency improvements and targeted measures for vulnerable households.
    • Energy retrofit of buildings. 
      The major cause of energy poverty is the low energy efficiency of homes. The study proposes measures aimed at improving the energy efficiency of homes, hence reducing energy demand.
    • Replacement of household appliances: „Old for New“ scheme.
      Due to low disposable income, energy-poor households own low efficient appliances that contribute to increased energy demand and hence energy poverty.
    • Heating system improvements related measures in households.
    • Implementation of low-cost energy efficiency with energy advice measures.