WARMER HOMES - A Strategy for Affordable Energy in Ireland

 
 
WARMER HOMES
A Strategy for Affordable Energy in Ireland
WARMER HOMES
A Strategy for Affordable Energy in Ireland
2   Warmer Homes A Strategy for Affordable Energy in Ireland
Contents


Foreword                                                                    7

Glossary of Terms and Abbreviations                                         9

Executive Summary                                                          11


1          Introduction, Policy Context and Vision for Affordable Energy   15
1.1        Introduction                                                    15
1.2        Approach to Formulation of this Strategy                        15
1.3        Policy and Organisational Context                               16
1.4        A Vision for Affordable Energy                                  17
1.5        Definitions and Nomenclature                                    19


2          Understanding and Measuring Energy Poverty                      21
2.1        What is Energy Poverty?                                         21
2.2        What is Affordable Energy?                                      21
2.3        What are the Causes of Energy Poverty?                          21
2.4        Defining and Measuring Energy Poverty                           22
2.5        Individual Household-level Indicator of Energy Poverty          24
2.6        Non-Energy Benefits of Low-Income Housing Retrofits             32
2.7        Energy Prices and Affordability                                 33


3          The Challenge – Extent and Impact of Energy Poverty             37
3.1        Extent of Energy Poverty                                        37
3.2        Who is Affected and Most at Risk?                               38
3.3        The Key Risk Factors for Energy Poverty                         48


4          Existing Measures and Actions                                   51
4.1        Introduction                                                    51
4.2        Improving Energy Efficiency of the Housing Stock                51
4.3        Income Supports                                                 53
4.4        Energy Supply                                                   56
4.5        Information Dissemination and Communication                     57
4      Warmer Homes A Strategy for Affordable Energy in Ireland




5          Looking Forward                                                       59
5.1        Introduction                                                          59
5.2        Targeting Priority Households                                         59
5.3        Work Packages                                                         60
5.4        Introducing an Area-based Approach to Energy Poverty Mitigation       62
5.5        Ensuring Greater Access to Energy Efficiency Measures                 63
5.6        Reforming Eligibility Criteria for Energy Efficiency Schemes          63
5.7        Review of the National Fuel Scheme and Household Benefits Scheme      64
5.8        Other Activities                                                      64
5.9        Conclusions                                                           65
5.10       Key Actions                                                           66


Annex 1 Membership of the Inter-Departmental/Agency Group on Affordable Energy   71

Annex 2    Respondees to Public Consultation Paper                               72

Annex 3    Income Support Eligibility                                            73
List of Tables

Table 1: Estimated Annual Running Costs for Typical Dwelling Types and BER Ratings based on 2010 Fuel
Prices – € per annum                                                                                       26

Table 2: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Median Income Household                                   28

Table 3: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Household with Income = 1/2 of Median Household
Disposable Income                                                                                          29

Table 4: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Household with Income = 1/3 of Median Household
Disposable Income                                                                                          30

Table 5: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings - Annual Energy
Expenditure as % of Household Disposable Income: Household with Income = 1/4 of Median Household
Disposable Income                                                                                          31

Table 6: Movements in Energy Affordability                                                                 35

Table 7: Energy Poverty in Ireland – Number of Households Experiencing Energy Poverty                      37

Table 8: Subjective Measures of Energy Poverty                                                             38

Table 9: Energy Poverty and Income Poverty                                                                 39

Table 10: Risk Factors for Energy Poverty                                                                  48

Table 11: National Fuel Scheme payments 2004–2010                                                          54

Table 12: Household Benefits payments 2004–2010                                                            55
6    Warmer Homes A Strategy for Affordable Energy in Ireland




List of Figures

Figure 1: Composition of Retail Electricity Prices                                       33

Figure 2: Energy Poverty Rates by Income Group                                           40

Figure 3: Energy Poverty Rates by Household Composition                                  41

Figure 4: Energy Poverty Rates by Housing Tenure                                         42

Figure 5: Energy Poverty Rates by Marital Status of Household Chief Economic Supporter   43

Figure 6: Energy Poverty Rates by Accommodation Type                                     44

Figure 7: Energy Poverty Rates by Accommodation Age                                      45

Figure 8: Energy Poverty Rates by Type of Heating Systems Used                           47
Foreword
Minister for Communications,
Energy and Natural Resources

For those unable to afford to heat or light their         to link thermal efficiency to energy-related income
home, the effects can be hugely detrimental to            supports in a more effective manner, thereby taking
their ongoing health and wellbeing. This document         into account a household’s need to spend on
marks the first Government strategy aimed at              energy.
specifically making energy more affordable for
                                                          In addition to our ongoing commitment to
low-income households in Ireland. Up to now, efforts
                                                          improving energy efficiency in low-income homes,
by government departments and agencies have
                                                          this Government will introduce, and progressively
focused on delivering on discrete policy remits; this
                                                          increase, minimum thermal efficiency standards
strategy changes this approach, setting a clear
                                                          for properties offered for rent. Our focus will be on
framework for how we will measure, record and
                                                          progressively removing properties in the E, F and
report on the numbers of households in difficulty
                                                          G bands from the rental market by 2020. We will
and the actions necessary to improve the quality of
                                                          also ensure that appropriate standards are set for
life for such households.
                                                          the Rent Supplement and Rental Accommodation
The underlying factors that influence energy              Schemes, for which Government provides financial
affordability are well understood and have                support.
been subject to extensive scrutiny as part of the
                                                          We have looked at the experiences of other
development of this strategy. The complex interplay
                                                          countries and taken note of efforts to fully eradicate
of energy prices, thermal efficiency and incomes
                                                          energy poverty. In our view this is not a realistic goal
mean that no one simple solution can be brought
                                                          for this strategy, as energy poverty is not something
to bear. Each situation is unique, requiring a
                                                          that we can overcome today, tomorrow or even
different set of policy interventions. The way in which
                                                          in the next few years. The factors that influence
Government responds needs to vary according
                                                          vulnerability are numerous and pervasive. What we
to individual circumstances. We plan to tailor our
                                                          must do is address each of the underlying causes of
response to ensure that resources are directed at
                                                          vulnerability and systematically remove the barriers
those most in need.
                                                          that prevent people from benefiting from high
There is only one long-term solution to making            quality accommodation. Without an improvement
energy more affordable – using less of it. Improving      in the quality of homes, this strategy will not be
the thermal efficiency of homes is the most cost-         effective.
effective way of increasing energy affordability and
                                                          This strategy will require a cross-departmental
reducing energy poverty. While income supports
                                                          and agency response, with identified actions to
such as the National Fuel Scheme and Household
                                                          be delivered in the short, medium and long term,
Benefits play an important role in reducing the
                                                          depending on the nature of the change required
financial burden of energy bills, they represent an
                                                          and the level of analysis to be undertaken. While
expensive way of addressing the real problem –
                                                          we have been actively engaged in retrofitting
poor quality homes. Since 2004, over €2 billion has
                                                          low-income homes since 2000, more recently we
been spent on income supports. Over the same
                                                          have redoubled our efforts. In 2010 close to 25,000
period €60 million has been provided for thermal
                                                          homes benefited from energy efficiency measures,
efficiency measures in the private sector, with
                                                          representing an 11-fold increase in programme
a further €183 million spent on central-heating
                                                          activity since 2006. However, this level of action
upgrades and retrofits in public sector housing. It is
                                                          will need to continue and will require the ongoing
clear that we need to change our priorities if energy
                                                          support of the Sustainable Energy Authority
poverty is to be tackled in a meaningful way. Our
                                                          of Ireland, the Money Advice and Budgeting
starting point will be to assess whether it is possible
8    Warmer Homes A Strategy for Affordable Energy in Ireland




Service, the Society of St. Vincent de Paul, the
Department of Social Protection, community-based
organisations, state energy companies and others,
if we want to address this problem substantively.

We are publishing a technical annex in order to
put into the public domain the data that has been
generated as part of the strategy development
process. We hope that this will be of assistance to
those with an interest in the area.

The publication of this document marks the delivery
of an important Programme for Government
commitment. I would like to thank the Inter-
Departmental Group on Affordable Energy for its
work in developing this strategy, along with the
stakeholders who made valuable submissions to the
consultation exercise.

Pat Rabbitte T.D.

Minister for Communications, Energy and Natural
Resources
Glossary of Terms and
Abbreviations

CER      Commission for Energy Regulation

DCENR	Department of Communications, Energy
         and Natural Resources

DoECLG	Department of Environment, Community
         and Local Government

DSP	Department of Social Protection

EPBD     Energy Performance of Buildings Directive

EPSSU    Energy Policy Statistical Support Unit (SEAI)

IDGAE	Inter-Departmental/Agency Group on
         Affordable Energy

IPH	Institute of Public Health in Ireland

Mean	A measure of the average value of a set of
         numbers, whereby the average equates
         to the mathematical or arithmetic
         average of the values, or the sum of the
         values divided by the number of values. A
         mean value is subject to greater influence
         from outlier (very high or low) values in a
         range of values.

Median	A measure of the average value of a set
         of numbers, which separates the higher
         half of a sample, a population, or a
         probability distribution from the lower half.

SEAI	Sustainable Energy Authority of Ireland

SVP	The Society of St. Vincent de Paul
10   Warmer Homes A Strategy for Affordable Energy in Ireland
Executive Summary


Introduction                                                         A Vision for Affordable Energy

Everybody should be able to afford to heat                           It is important to set an overarching vision for
and power their home to adequate levels. This                        energy affordability so that it is clear what we
fundamental objective is the starting point for Warmer               are trying to achieve with the development and
Homes – A Strategy for Affordable Energy in Ireland                  future implementation of this strategy.
and acts as the guiding principle for everything
that follows. Much has been achieved in recent
years through a combination of income supports,
programmes to improve the energy efficiency of the                   Vision for Affordable Energy
housing stock and energy awareness initiatives, but
                                                                     in Ireland
it is timely to develop and implement an affordable
energy strategy given the financial difficulties currently           The achievement of a standard of living whereby
being experienced by many in society. This strategy                  households are able to afford all of their energy needs
presents a cohesive framework for achieving more                     and where individuals and families live in a warm and
affordable energy, ensuring that existing and future                 comfortable home that enhances the quality of their
measures are targeted at households where the risk                   lives and supports good physical and mental health
and adverse effects of energy poverty are greatest.
                                                                     Associated with this vision are a number of guiding
The strategy has been developed by the Inter-                        principles, which permeate the priorities, actions
Departmental/Agency Group on Affordable Energy                       and delivery approaches set out in this strategy.
(IDGAE), which was established in the summer of 2008                 Specifically, this strategy will:
to serve as the key coordinating body in this area.1
                                                                     • Focus on improving the thermal efficiency of low-
To deliver this strategy will require an integrated                     income homes.
approach, involving extensive coordination
amongst a range of actors in both the public and                     • Focus on maximising the quality of people’s lives

private sectors. This reflects the complex nature of                    through implementation of practical initiatives.

the challenge, which necessitates government                         • Apply a partnership approach, entailing close
departments and agencies, local authorities, energy                     coordination and alignment of policy levers
utilities, regulators, non-governmental organisations                   between stakeholders, including government
and community-based organisations all working                           departments and agencies, local authorities,
together, each delivering a part of the solution. This                  energy utilities, the health and social services
spirit of collaboration is essential if we are to effectively           providers, non-governmental organisations and
implement actions that will have a lasting impact on                    community-based organisations.
the health and wellbeing of households in Ireland.
                                                                     • Promote social inclusion and target social need.

                                                                     • Be integrated within emerging national anti-
                                                                        poverty policy.

1	The IDGAE is chaired by the Department of Communications,         • Aim to deliver cost-effective approaches to
   Energy and Natural Resources and includes the Departments
                                                                        addressing energy poverty.
   of Public Expenditure and Reform, Taoiseach, Environment,
   Community and Local Government, Social Protection, Health,        • Be consistent with the Government’s wider
   and Children, in addition to the Commission for Energy
                                                                        climate-change policy, thereby also benefiting the
   Regulation, SEAI, ESB Electric Ireland, the Institute of Public
                                                                        environment.
   Health in Ireland, the Energy Poverty Coalition and Bord Gáis.
12     Warmer Homes A Strategy for Affordable Energy in Ireland




Defining Energy Poverty                                        afford its energy needs if it is required to spend at
                                                               a level greater than twice the national average
The definition of energy poverty that will be applied          (median) share (currently 10%) of disposable
by Government departments, agencies and other                  income spent on energy services to achieve
bodies in the implementation of this strategy takes            an acceptable standard of warmth. Under this
the above factors into account and is as follows:              measure, a comprehensive indicator of energy
                                                               poverty will be developed and implemented
                                                               over the next 3-5 years.
Definition of Energy Poverty
                                                            By following this approach we will be able to
A household is considered to be energy poor if              estimate the overall extent of energy poverty in
it is unable to attain an acceptable standard of            Ireland, before migrating to a more accurate and
warmth and energy services in the home at an                comprehensive model. It is therefore appropriate
affordable cost.                                            to complement the preliminary measure with
                                                            supporting indicators that capture the severity of
                                                            energy poverty in terms of households that are most
The above definition provides a starting point for
                                                            critically affected. This is also important from the
the ongoing measurement of energy poverty in
                                                            perspective of prioritising and targeting measures
Ireland, which will require the following two-stage
                                                            and resources at those households that are
development process:
                                                            considered a priority.
1. A preliminary measure of energy poverty will
                                                            We will, therefore, measure energy poverty by
     be estimated which compares an individual
                                                            reference to the following levels of severity:
     household’s actual expenditure on energy,
     relative to its income, to the average proportion      1. The core indicator of energy poverty: whereby
     of income spent on energy across all households           a household is considered to be experiencing
     in the State. Under the preliminary measure, a            energy poverty if, in any one year, it spends more
     household is defined as being unable to afford            than 10% of its disposable income on energy
     its energy needs if it spends at a level greater          services in the home.
     than twice the national average (median) share
                                                            2. An indicator of severe energy poverty: whereby
     (currently 10%) of disposable income spent on
                                                               a household is considered to be experiencing
     energy services.2 This is an interim solution which
                                                               severe energy poverty if, in any one year, it
     will be used until such time as a comprehensive
                                                               spends more than 15% of its disposable income
     measure can be developed.
                                                               on energy services in the home.
2. A comprehensive measure of energy poverty
                                                            3. An indicator of extreme energy poverty: whereby
     will be developed using a new energy poverty
                                                               a household is considered to be experiencing
     modelling framework. This approach will
                                                               extreme energy poverty if, in any one year, it
     combine a survey of housing conditions with a
                                                               spends more than 20% of its disposable income
     formal energy poverty modelling framework to
                                                               on energy services in the home.
     estimate what households need to spend, so
     that a household is defined as being unable to



2	Household Disposable Income equates to total Household
     Disposable Income and is unadjusted.
Executive Summary 13




Once the comprehensive measure has been                  Of the actions identified in Chapter 5, the following
developed, we will recalibrate the above indicators      five are central to the successful implementation of
to reflect the need to spend, as opposed to what         this strategy:
is actually spent. This will provide a more accurate
                                                         1. We will actively progress five priority work
means of gauging energy poverty.
                                                            packages: Thermal Efficiency Standards, Energy
                                                            Suppliers, Area-based Approach, Data and
                                                            Information, and Communication.
Looking Forward
                                                         2. We will introduce an area-based approach to
Energy poverty is a complex phenomenon, which
                                                            energy poverty mitigation.
necessitates an appropriately nuanced response
from Government. It is thus heartening to note that      3. We will ensure greater access to energy
many of the organisations that will have a role in          efficiency measures.
delivering this strategy are already engaged in
carrying out a range of initiatives, programmes and      4. We will reform eligibility criteria for energy
supports, which deliver important benefits for those        efficiency schemes.
affected by energy poverty.
                                                         5. We will review the National Fuel Scheme and
However, we need to be aware that our analysis              Household Benefits Scheme to examine the
suggests that an estimated one-fifth of households          feasibility of aligning income supports with the
in Ireland are likely to experience some form of            energy efficiency and income of the home.
energy poverty, while about 10% of households are
likely to be experiencing severe energy poverty.
There is an urgent and critical need for a carefully
focused plan to address this issue.

In the long run, an effective strategy for addressing
energy poverty and attaining affordable access
to household energy requirements must focus on
ensuring that the energy efficiency performance of
the housing stock is improved. This is the overarching
objective of the strategy and represents the most
cost-effective means of protecting priority groups.
Moreover, the relationship between energy poverty
and energy efficiency clearly points to the fact that
the poorest households stand to benefit most from
improvements in energy efficiency.
14   Warmer Homes A Strategy for Affordable Energy in Ireland
Chapter 1
Introduction, Policy Context and Vision for
Affordable Energy

1.1 Introduction                                         such as electricity or gas disconnections, this
                                                         strategy is focused on tackling the root causes
Ireland’s current economic difficulties bring into       of energy poverty, applying a holistic approach,
stark relief the challenges faced by everyone active     combining national and geographically focused
in the area of energy poverty mitigation. A sharp        actions in the areas of income supports, targeted
increase in the number of domestic electricity           energy efficiency improvements, and advice and
and gas disconnections is one very visible result        information. These measures will be aligned through
of a general trend in energy becoming relatively         the strategy and their implementation overseen
more expensive in the last few years. Likewise, the      by the Inter-Departmental/Agency Group on
imposition of a carbon tax has had the effect of         Affordable Energy (IDGAE).
increasing the cost of carbon-intensive fuels, which
are often the primary heating source for people on       The challenge facing each of the organisations

low incomes. While there is an argument to suggest       involved in delivering this strategy should not be

that the carbon tax should be removed, there are         underestimated, particularly as Ireland faces a

other pressing priorities, most notably the mitigation   period of economic austerity, with pressures on

of climate change, that also require immediate           public expenditure and against a backdrop of

action. The strategy will therefore have to be           expected significant increases in the cost of energy.

implemented in a complex environment in which            It is unlikely that the ultimate goal of this strategy

other policy objectives also have to be delivered.       can be achieved over the life of the strategy, 2011–
                                                         2013; there are simply too many poorly built homes
The Government believes that everyone should be          to be improved in such a short period of time.
able to afford to live in a warm and healthy home.       Nevertheless, much can be done over the next
While much has been accomplished in recent years         three years, including, perhaps most importantly,
to support this objective through the expansion          better targeting of priority households. The strategy
of programmes to improve the energy efficiency           will be reviewed in 2014.
of the housing stock, energy awareness initiatives
and income supports, it is now timely to publish
an affordable energy strategy. Warmer Homes – A          1.2	Approach to Formulation of
Strategy for Affordable Energy in Ireland presents
                                                              this Strategy
a cohesive governmental framework for achieving
energy affordability, ensuring that existing and         The strategy has been developed by the IDGAE,
future measures are targeted at the most vulnerable      which was established in the summer of 2008 to
groups in society, where the risk and adverse effects    serve as the key coordinating body to ensure the
of energy poverty are greatest.                          cohesiveness of the various actions already under
                                                         way and those planned under this strategy.3
This strategy is designed to ensure that households
can achieve affordable access to their energy
requirements through a range of practical initiatives
                                                         3	The IDGAE is jointly chaired by the Department of
and programmes designed to ultimately reduce                Communications, Energy and Natural Resources and
their demand for energy, thus protecting those              the Department of Social Protection, and includes the
considered most at risk of energy poverty. In               Departments of Public Expenditure and Reform, Taoiseach,
the long run this represents the most sustainable           Environment, Community and Local Government, Health, and
                                                            Children, in addition to the Commission for Energy Regulation,
approach to energy poverty mitigation. It is
                                                            the Sustainable Energy Authority of Ireland (SEAI), ESB Electric
important to note that, while attention is often
                                                            Ireland, the Institute of Public Health in Ireland, The Society of
focused on the consequences of energy poverty,              St. Vincent de Paul and Bord Gáis.
16     Warmer Homes A Strategy for Affordable Energy in Ireland




A steering group, consisting of members of                        to maintain a comfortable and high-quality
the IDGAE, was formed in 2010 to oversee the                      standard of living”, and “building viable and
development of the strategy. The steering group                   sustainable communities, improving the lives
prepared a discussion paper for public consultation,              of people living in disadvantaged areas and
for which twelve responses were received from                     building social capital”. These areas include
a variety of bodies and NGOs (further details are                 addressing the challenge of energy poverty.
contained in Annex 2). As a result, this document
                                                              • Delivering a Sustainable Energy Future for Ireland
has benefited immensely from the submissions and
                                                                  is the Government’s energy policy framework
presentations received from interested parties.
                                                                  for the period 2007–2020. Strategic Goal 5 in this
In early 2010, following a competitive tendering                  White Paper enunciates the Government’s policy
process, Indecon International Economic                           in the area of affordable energy, stating that
Consultants were appointed to assist the IDGAE.                   everyone should be able to afford an adequate
                                                                  energy supply and to live in a warm home.5

                                                              • Maximising Ireland’s Energy Efficiency – the
1.3	Policy and Organisational                                    National Energy Efficiency Action Plan, 2009–
     Context                                                      2020 6 sets out policies and measures that have
                                                                  the potential to contribute towards achieving
This strategy is set within the context of, and is
                                                                  Ireland’s national target of a 20% reduction
consistent with, broader government policy in
                                                                  in energy demand across the whole of the
relation to poverty and social inclusion, and also
                                                                  economy by 2020. The Action Plan devotes a
climate change policy.
                                                                  chapter to the issue of affordable energy and
Three overarching policy documents are of                         identifies a number of actions that support
particular relevance in setting the context for the               improving the energy efficiency of low-income
affordable energy strategy, namely the National                   homes. The plan also sets out a vision for future
Action Plan for Social Inclusion, the Energy Policy               housing stock where “all new Irish housing will
Framework ‘Delivering a Sustainable Energy Future                 be carbon-neutral” and where “efficiency
for Ireland’ and the National Energy Efficiency                   standards in older homes will be significantly
Action Plan.                                                      improved through retrofitting actions”.7

• The National Action Plan for Social Inclusion
     sets out how the Government’s social inclusion
     strategy will be achieved over the period
     2007–2016.4 The plan identifies a number of
     high-level strategic goals in key priority areas
     in order to achieve the overall objective of
     reducing consistent poverty. The areas where
     the plan focuses its attention include provision of      5	Delivering a Sustainable Energy Future for Ireland – Energy
     “the type of supports that enable older people               Policy Framework 2007–2020. Government White Paper.
                                                                  Department of Communications, Energy and Natural
                                                                  Resources. See: www.dcenr.gov.ie.

4	National Action Plan for Social Inclusion, 2007–2016.      6	Maximising Ireland’s Energy Efficiency – the National

     Government Publications Office, Dublin, February             Energy Efficiency Action Plan, 2009–2020. Department of

     2007, or via: http://www.socialinclusion.ie/documents/       Communications, Energy and Natural

     NAPinclusionReportPDF.pdf.                               7   Ibid. Page 75.
Introduction, Policy Context and Vision for Affordable Energy Chapter 1          17




1.4 A Vision for Affordable Energy                        • Be consistent with the Government’s wider
                                                             climate change policy, thereby also benefiting
By setting an overarching vision for energy                  the environment.
affordability, we can make a clear statement about
what we are trying to achieve with the development        1.4.2		 Achieving the vision
and future implementation of this strategy.
                                                          Ultimately, the success of this strategy will be judged
                                                          on the extent to which the overarching vision is
                                                          realised, and the outcomes of the actions set out
Vision for Achievement of
                                                          in this framework result in improved outcomes for
Affordable Energy                                         low-income households. In particular, it is envisaged
The achievement of a standard of living whereby           that the realisation of this strategy will bring about
households are able to afford all of their energy         real and lasting benefits, under the following
needs and where individuals and families live in          headings:
a warm and comfortable home that enhances
                                                          • The relief of hardship and suffering among families
the quality of their lives and supports good
                                                             and individuals experiencing energy poverty.
physical and mental health.
                                                          • The social benefits arising from improved public
                                                             health and the economic benefits arising from
                                                             reduced heath service expenditure and the
1.4.1		 Guiding principles for this vision
                                                             reduction of health inequalities.
Several guiding principles associated with this
vision permeate the priorities, actions and delivery      • The benefits to the environment and the
approaches set out in this strategy. Specifically, this      achievement of Ireland’s climate change policy
strategy will:                                               goals through an improvement in the energy
                                                             efficiency of the housing stock, combined
• Focus on improving the thermal efficiency of
                                                             with better energy consumption behaviour of
   low-income homes.
                                                             households.
• Focus on maximising the quality of people’s lives
                                                          This strategy fundamentally tries to do two things:
   through implementation of practical initiatives.
                                                          first, to set out a framework for measuring energy
• Apply a partnership approach, entailing close           affordability and energy poverty (while these are
   coordination and alignment of policy levers            similar concepts, in practice they mean different
   between stakeholders, including government             things), and, secondly, develop a series of measures
   departments and agencies, local authorities,           and actions that will both improve the affordability
   energy utilities, the health and social services       of energy in Ireland and reduce the instances of
   providers, non-governmental organisations and          energy poverty.
   community-based organisations.
                                                          One of the first and most important actions will
• Promote social inclusion and target social need.        be to create a model that can accurately track
                                                          movements in energy affordability and poverty.
• Be integrated within emerging national anti-            This is an essential first step to enable the design
   poverty policy.                                        of fact-based policies. Energy poverty, as with
                                                          poverty more generally, is a complex phenomenon
• Aim to deliver cost-effective approaches to
                                                          and is influenced by a range of economic and
   addressing energy poverty; and
18     Warmer Homes A Strategy for Affordable Energy in Ireland




social issues. Setting out a formal definition                 scheme. It is also implementing the new National
and measurement approach will facilitate the                   Energy Retrofit Programme (from 2011), which
ongoing assessment and monitoring of the extent                brings a new focus to energy-saving programmes
and characteristics of energy poverty. However,                more generally.
the application of a formal definition in line
                                                            • The Department of Social Protection formulates
with international best practice is dependent
                                                               appropriate social protection policies and
upon the availability of detailed information
                                                               administers and manages the delivery of a wide
on the characteristics of households and the
                                                               range of schemes and supports. These include
accommodation in which they live. Unfortunately,
                                                               schemes such as the National Fuel Scheme
not all of this information is available, which makes
                                                               and Household Benefits Package (electricity/
it difficult to precisely measure and track energy
                                                               gas component) which are designed to provide
poverty in Ireland. Nevertheless, this strategy sets
                                                               income support to low-income and other
out an approach which will see a transition from
                                                               qualifying households, including to older persons.
an interim approach to measurement of energy
poverty to a more comprehensive and robust                  • The Department of Environment, Community
mechanism over the next 3–5 years.                             and Local Government is responsible for funding
                                                               social housing delivered through local authorities
1.4.3		Requirement for a partnership approach                 and voluntary and cooperative housing bodies,
Effective implementation of this strategy will                 and the establishment of minimum standards
require an integrated approach, involving                      and regulations for new buildings and private
extensive coordination by a range of actors. This              rental accommodation. The Department also
reflects the complex nature of the challenge,                  provides supports for structural upgrades of
which necessitates government departments                      homes occupied by older people and for local
and agencies, local authorities, energy utilities,             authority houses under the Housing Aid for Older
regulators, non-governmental organisations                     People scheme and the Local Authority social
and community-based organisations all working                  housing improvement programme.
together; each delivering within its own areas and
                                                            • The Department of Health is responsible for
competencies. This spirit of collaboration is essential
                                                               government policy on population health and
if we are to effectively implement actions that will
                                                               health services. The Health Services Executive
have a lasting impact on the health and wellbeing
                                                               (HSE) is responsible for the delivery and
of at-risk households in society.
                                                               management of health services, and assists in
The main government departments that have a role               the Keep Well and Warm initiative.
in implementing this strategy, working in partnership
                                                            • The Department of Public Expenditure and
with each other and with other agencies and
                                                               Reform, which has a key policy role to play in
stakeholders, are as follows:
                                                               relation to the resource implications of delivering
• The Department of Communications, Energy and                 this strategy.
     Natural Resources has responsibility for the energy
     portfolio within government and has adopted a
     leadership role in the area of energy affordability.
     The Department funds the Sustainable Energy
     Authority of Ireland (SEAI)’s Better Energy: Warmer
     Homes scheme and Better Energy: Homes
Introduction, Policy Context and Vision for Affordable Energy Chapter 1   19




In addition to the above government departments,
the following agencies and bodies have key roles in
implementing this strategy:

• The Sustainable Energy Authority of Ireland (SEAI)
    is responsible for delivering energy efficiency-
    based support schemes to households. It
    administers the Better Energy: Warmer Homes
    scheme, which is the primary mechanism for
    improving the energy performance of homes
    occupied by those on low incomes.

•   The Commission for Energy Regulation (CER)
    plays a statutory role in protecting vulnerable
    customers in the energy markets. It has set
    out guidelines for the protection of household
    electricity and gas customers, particularly
    older people, customers relying on life-support
    equipment and those with disabilities.

• Energy suppliers – electricity and gas suppliers
    have already put in place customer charters
    and codes of practice. The IDGAE will engage
    with oil and solid-fuel energy suppliers to ensure
    that their customers are equally protected.



1.5 Definitions and Nomenclature
This strategy sets out formal definitions to facilitate
ongoing assessment and monitoring of the extent
of energy poverty and the closely related concept
of affordable energy. Throughout this document
the terms ‘affordable energy’ and ‘energy poverty’
are used to express different concepts and, while
related, mean different things. Internationally, the
term fuel poverty is often used interchangeably with
energy poverty.
20   Warmer Homes A Strategy for Affordable Energy in Ireland
Chapter 2
Understanding and Measuring Energy Poverty


2.1 What is Energy Poverty?                              2.3	What are the Causes of
Energy poverty can be described as a situation                Energy Poverty?
whereby a household is unable to attain an               Both energy poverty and affordable energy can be
acceptable level of energy services (including           considered the product of the interaction of three
heating, lighting, etc) in the home due to an            factors or drivers, namely:
inability to meet these requirements at an
affordable cost.                                         1. Household income.

                                                         2. The price of energy.

2.2 What is Affordable Energy?                           3.	The energy efficiency of the dwelling, its
                                                            energy systems and the household’s energy
The terms ‘energy poverty’ and ‘affordable energy’
                                                            consumption patterns or behaviour.
are often used interchangeably, as they are closely
related concepts. Affordability more generally           In practice, each of the above factors/drivers
measures expenditure relative to a household’s           is influenced by a complex mix of economic
income. In this context, affordable energy describes     and social issues. All households have individual
a situation where a household can attain an              requirements in relation to heating and energy for
acceptable level of energy services at a level of        other uses, including electricity for appliances,
expenditure that is affordable relative to its overall   which are dependent upon factors such as
disposable income. In practice, the achievement          household occupancy and the characteristics of
of achieving more affordable energy equates to a         occupants such as their age and behaviour. As a
corresponding reduction in energy poverty.               result, the nature and extent of energy poverty will
                                                         vary depending on how these factors interact with
This strategy sets out a formal definition that will
                                                         the above drivers. This makes the development of
facilitate the ongoing measurement of energy
                                                         a comprehensive measure of energy poverty a
poverty but also includes a complementary
                                                         complex process, requiring data from a number
affordability index which will enable monitoring
                                                         of sources in order to create a robust reporting
of the extent to which energy is becoming more
                                                         framework.
or less affordable for households from a macro
perspective as a result of changes in key drivers        Fundamentally, the most effective long-term
such as energy prices.                                   solution is ensuring that demand for energy
                                                         decreases. This is the only mechanism that protects
Both indicators will play an important role in
                                                         against future increases in energy prices, over which
understanding the prevalence of energy poverty
                                                         Ireland has a limited ability to control. Likewise, the
but also the number of at-risk households. In
                                                         effects of extended periods of cold weather, such
this way we believe that state bodies and other
                                                         as those experienced in recent years, can only be
organisations will be better placed to respond to
                                                         mitigated through highly energy efficient homes.
further changes in the economic environment.
22     Warmer Homes A Strategy for Affordable Energy in Ireland




2.4	Defining and Measuring                                             Definition of Energy Poverty
     Energy Poverty                                                     A household is considered to be energy-poor if
                                                                        it is unable to attain an acceptable standard of
Depending on the precise approach applied to
                                                                        warmth and energy services in the home at an
the definition and measurement, varying levels
                                                                        affordable cost.
of energy poverty can be reported.8 An effective
definition of energy poverty must serve three
purposes, namely:
                                                                        2.4.1		Measuring the extent of energy poverty
• To establish the existing position in relation to the
                                                                        The application of a formal definition, in line
     extent of energy poverty and the groups most
                                                                        with best practice internationally, is dependent
     affected.
                                                                        upon the availability of detailed information
• To facilitate effective policy design to address                      on the characteristics of households and the
     the impact of energy poverty.                                      accommodation in which they live. Unfortunately,
                                                                        there are a number of informational deficiencies
• To monitor progress and assess the effectiveness
                                                                        that preclude precise measurement, which leads to
     of policy interventions to address energy poverty
                                                                        difficulties tracking energy poverty on a consistent
     and improve energy affordability.
                                                                        basis.
During the development phase of this strategy,
                                                                        To overcome these informational constraints,
a wide range of views and inputs were received
                                                                        this strategy sets out a two-stage approach to
regarding the strengths and weaknesses of
                                                                        implementing the above definition of energy
alternative approaches to defining and measuring
                                                                        poverty. This involves initially using existing
energy poverty and affordability.9 In addition to
                                                                        information to estimate the extent and nature of
these inputs, the definition of energy poverty set
                                                                        energy poverty currently affecting Irish households
out below reflects and builds upon international
                                                                        but moves, over the next 3-5 years, towards a
experience and research, including developments
                                                                        comprehensive data-collection and modelling
at European Union level.
                                                                        framework which will enable more precise
On the basis of consideration of these factors, the                     measurement and assessment of energy poverty
definition of energy poverty that will be applied                       on an ongoing basis. Crucially, this will allow us to
by government departments, agencies and other                           take into account the relative thermal efficiency of
bodies in implementing this strategy will be as                         households, combined with occupation patterns,
follows:                                                                in determining the numbers in energy poverty. This
                                                                        will greatly assist in targeting households for future
                                                                        energy efficiency upgrades.

8    See the technical annex for further information.

9	We are particularly grateful to Dr Sean Lyons, ESRI, and Dr
     Brenda Boardman, Environmental Change Unit, Oxford
     University, for their advice and assistance in the formulation
     of this strategy. Previous research referenced during the
     development of this strategy included: (a) Scott, S., Lyons, S.,
     Keane C., McCarthy D., and Richard S.J. Tol, Fuel Poverty in
     Ireland: Extent, Affected Groups and Policy Issues. ESRI Working
     Paper 262, November 2008, and (b) Boardman, B., 2010. Fixing
     Fuel Poverty – Challenges and Solutions, Earthscan.
Understanding and Measuring Energy Poverty Chapter 2          23




On the basis of the above two-stage approach, this                      Estimating Severity of Energy Poverty
strategy will measure the extent of energy poverty
                                                                        under the Preliminary Measure
as follows:10
                                                                        The preliminary measure of energy poverty
• A preliminary measure of energy poverty will
                                                                        enables the estimation of the overall extent of
     be estimated which compares an individual
                                                                        energy poverty in Ireland. In practice, some
     household’s actual expenditure on energy,
                                                                        social groups are likely to be more severely
     relative to its income, to the average proportion
                                                                        affected by energy poverty than others. As a
     of income spent on energy across all households
                                                                        result, it is appropriate to complement the core
     in the State.11 Under the preliminary approach,
                                                                        preliminary indicator of energy poverty with
     a household is considered to be experiencing
                                                                        supporting indicators which capture the severity
     energy poverty if, in any one year, it spends
                                                                        of energy poverty in terms of households that are
     more than 10% of its disposable income on
                                                                        most critically affected. This is critical in order to
     energy services in the home. This approach
                                                                        prioritise and target measures and resources at
     will estimate the overall number of households
                                                                        households that are most in need.
     experiencing energy poverty in addition to
     indicating, on the basis of the available data,                    1. The core indicator of energy poverty: whereby
     the types of households affected and the risk                         a household is considered to be experiencing
     factors associated with energy poverty. The                           energy poverty if, in any one year, it spends
     estimates based on this preliminary approach                          more than 10% of its disposable income on
     are presented in the next chapter. However,                           energy services in the home.
     this approach may underestimate the extent of
                                                                        2. An indicator of severe energy poverty:
     energy poverty as low-income households can
                                                                           whereby a household is considered to be
     under-heat their homes relative to the level that
                                                                           experiencing severe energy poverty if, in
     would be required based on healthy standards.
                                                                           any one year, it spends more than 15% of its
                                                                           disposable income on energy services in the
                                                                           home.

                                                                        3. An indicator of extreme energy poverty:
                                                                           whereby a household is considered to be
                                                                           experiencing extreme energy poverty if, in
                                                                           any one year, it spends more than 20% of its
                                                                           disposable income on energy services in the
                                                                           home.

                                                                        Estimates of the extent of energy poverty and
10	For a full description of the methodological and technical          severity of energy poverty under the preliminary
     assumptions underlying the approach to defining and                measure are presented in the next chapter.
     measuring energy poverty set out in this strategy, refer to
     the supporting document Warmer Homes: A Strategy for
     Affordable Energy in Ireland – Technical Annex.

11   This preliminary approach represents a partial application of
     the definition of energy poverty set out in Table 1 on the basis
     that it measures energy poverty on the basis of a household’s
     actual expenditures on energy as opposed to required
     expenditure to achieve pre-defined levels of comfort.
24     Warmer Homes A Strategy for Affordable Energy in Ireland




• A comprehensive measure of energy poverty                     2. A household is considered to be in severe
     will be developed using a new energy poverty                  energy poverty if it must spend at a level
     modelling framework. This approach will combine               equal to or greater than three times the
     a survey of housing conditions with a formal                  national average (median) share of
     energy poverty modelling framework (described                 disposable income spent on energy services
     further in Chapter 4 under ‘Information and Data              to achieve an acceptable standard of
     Systems’) to estimate what households need                    warmth.
     to spend “to attain an acceptable standard
                                                                3. A household is considered to be in extreme
     of warmth and energy services in the home at
                                                                   energy poverty if it must spend at a level
     an affordable cost” as per the full definition
                                                                   equal to or greater than four times the
     of energy poverty set out above. It will define
                                                                   national average (median) share of
     ‘acceptable standard of warmth’ by reference
                                                                   disposable income spent on energy services
     to international best-practice standards and will
                                                                   to achieve an acceptable standard of
     take account of the efficiency of the dwelling,
                                                                   warmth.
     variations in outside temperatures (particularly
     during the winter) and energy/fuel costs to
     determine the required levels of household
     energy use.12 Combining this information with              2.5	Individual Household-level
     data on household incomes will assist in the                    Indicator of Energy Poverty
     identification of energy-poor households. Under
                                                                The preliminary measure is based on actual
     this approach, a formal, comprehensive measure
                                                                expenditures on household energy and does not
     of energy poverty will be developed and
                                                                take account of the actual levels of expenditure
     implemented over the next 3-5 years.
                                                                required for households to attain adequate levels of
                                                                comfort in the home.

Estimating Severity of Energy Poverty                           A key factor missing from the existing information
under the Comprehensive Measure                                 sources concerns the availability of datasets which
                                                                combine information on household income and
The comprehensive measure will seek to assess
                                                                expenditure with data on the physical – including
the severity of energy poverty in a household by
                                                                energy efficiency – characteristics of the dwelling in
reference to the following:
                                                                which the household resides. Detailed information
1. A household is considered to be in energy                    on household incomes and expenditure patterns
     poverty if it must spend at a level equal to               (including energy expenditures) is available through
     or greater than twice the national average                 the Household Budget Survey. In addition, the SEAI’s
     (median) share of disposable income spent                  Building Energy Rating (BER) database currently
     on energy services to achieve an acceptable                contains data on the energy rating of some 250,000
     standard of warmth.                                        households across the State. However, the two
                                                                databases are not integrated, precluding the
                                                                identification of income, expenditure and energy
                                                                efficiency features for the same household – which
12	The standard approach to defining ‘adequate warmth’ is by   is necessary to enable estimation of the extent of
     reference to World Health Organisation (WHO) guidelines,
                                                                energy poverty reflecting all three drivers of the
     which defines ‘adequate’ as equating to a temperature
                                                                phenomenon.
     of 21ºC in the main family/living-room and 18ºC in other
     occupied rooms of a dwelling.
Understanding and Measuring Energy Poverty Chapter 2   25




Estimating the extent of, and risk factors associated
with energy poverty based on required, as opposed
to actual, expenditures on energy services,
necessitates the application of a formal energy
poverty and residential fuel cost modelling framework.
In advance of the development of this model, it is
possible to use information developed by the SEAI
as a basis to identify combinations of household
income, dwelling type and energy efficiency rating
that are associated with a higher or lower risk of
energy poverty at the individual household level. This
approach is based on the measure of energy poverty
where annual required energy costs are greater than
10% of household disposable income. The estimates
provide a ‘ready reckoner’ for households to estimate
the risk of experiencing energy poverty and are
described further below.


2.5.1	Estimates of risk of energy poverty for typical
      households and dwellings
The following table (Table 1) presents the SEAI
estimates on annual running costs for principal
energy usage for typical dwelling types and BER
energy efficiency ratings, based on fuel prices
prevailing in July 2010. The running cost estimates
are indicative only as additional research is required
to fully validate these numbers. In addition, these
estimates relate to ‘principal energy usage’, defined
for the purposes of calculating a dwelling’s BER
rating on the basis of household energy for water
and space heating. This does not include energy
usage for cooking, lighting and other appliances.
The estimates are also based on specific
assumptions regarding household heating regimes
(and, inherently, occupancy), whereby a dwelling
is assumed to be heated to a level of comfort (i.e.
the main living-room/area is heated to achieve a
temperature of 21oC and the remaining habitable
area of the house is heated to a temperature of
18oC). These running cost estimates may therefore
need to be adjusted to reflect international norms.
26    Warmer Homes A Strategy for Affordable Energy in Ireland




Table 1: Estimated Annual Running Costs for Typical Dwelling Types and BER Ratings based on 2010 Fuel Prices
– € per annum

 BER Rating and    2 bed             3 bed semi-       4 bed semi-       Detached          Large house
 Dwelling Type/    apartment         detached          detached          house             (300 Sq M)
 Size              (75 Sq M)         house             house             (200 Sq M)
                                     (100 Sq M)        (150 Sq M)

 A1                110               150               230               300               500

 A2                230               300               450               600               900

 A3                280               370               600               700               1,100

B1                 340               460               700               900               1,400

B2                 440               600               900               1,200             1,800

B3                 500               700               1,100             1,400             2,200

C1                 600               900               1,300             1,700             2,600

C2                 800               1,000             1,500             2,000             3,000

C3                 900               1,200             1,700             2,300             3,500

D1                 1,000             1,400             2,100             2,700             4,100

D2                 1,200             1,600             2,400             3,200             4,800

E1                 1,400             1,800             2,800             3,700             5,500

E2                 1,600             2,100             3,100             4,200             6,300

F                  1,900             2,500             3,800             5,000             7,500

G                  2,400             3,100             4,700             6,300             9,400
Understanding and Measuring Energy Poverty Chapter 2   27




The annual household energy running-cost
estimates, relative to household disposable
income, provide a basis to identify combinations
of household income, dwelling type and energy
efficiency rating that are associated with a higher
or lower risk of energy poverty, based on the
comprehensive measure of energy poverty set
out in the strategy. In general, for a given level of
household disposable income, a household is likely
to face a higher risk of energy poverty where they
reside in larger and less energy efficient dwellings.
This is because such dwellings typically need more
energy to achieve an adequate level of heat. In
addition, all other factors being equal, the lower a
household’s disposable income the higher the risk of
the household experiencing energy poverty.


Mid-income households
The following table (Table 2) considers the position
for a reference household at the average (median)
level of household disposable income (in this case
where a household’s disposable income equates
to just under 800 per week). The analysis suggests
that a median-income household living in a typical
three-bed semi-detached house would, at 2010
energy prices, be likely to escape energy poverty
(i.e. required energy spend is not greater than 10%
of household disposable income). However, in the
case of larger dwellings, the risk of energy poverty
increases, particularly where the dwellings in which
these households reside have BER ratings towards the
bottom end of the scale. For example, a mid-income
household living in an older, less energy efficient
detached house of 200m2 in size with a BER rating
at E2 or below would be likely to experience energy
poverty. The risk of energy poverty would increase
further for mid-income households living in larger
dwellings (e.g. 300m2) with a BER of D2 or below.
28    Warmer Homes A Strategy for Affordable Energy in Ireland




Table 2: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Median Income Household*

 BER Rating and     2 bed               3 bed semi-        4 bed semi-         Detached           Large house
 Dwelling Type/     apartment           detached           detached            house              (300 Sq M)
 Size               (75 Sq M)           house              house               (200 Sq M)
                                        (100 Sq M)         (150 Sq M)

                      Annual Energy Expenditure as % of Household Disposable Income**

 A1                 0.3%                0.4%               0.6%                0.7%               1.2%

 A2                 0.6%                0.7%               1.1%                1.4%               2.2%

 A3                 0.7%                0.9%               1.4%                1.7%               2.7%

 B1                 0.8%                1.1%               1.7%                2.2%               3.4%

 B2                 1.1%                1.4%               2.2%                2.9%               4.3%

 B3                 1.2%                1.7%               2.7%                3.4%               5.3%

 C1                 1.4%                2.2%               3.1%                4.1%               6.3%

 C2                 1.9%                2.4%               3.6%                4.8%               7.2%

 C3                 2.2%                2.9%               4.1%                5.5%               8.4%

 D1                 2.4%                3.4%               5.1%                6.5%               9.9%

 D2                 2.9%                3.9%               5.8%                7.7%               11.6%

 E1                 3.4%                4.3%               6.7%                8.9%               13.3%

 E2                 3.9%                5.1%               7.5%                10.1%              15.2%

 F                  4.6%                6.0%               9.2%                12.1%              18.1%

 G                  5.8%                7.5%               11.3%               15.2%              22.7%

Source: Analysis based on SEAI annual running-cost estimates for domestic principal energy usage
Notes: * Where estimated median annual household disposable income in 2009 = €41,500 or €798 per week
** Shaded cells refer to households experiencing energy poverty based on annual running costs being greater than 10%
of disposable income
Understanding and Measuring Energy Poverty Chapter 2            29




Lower-income households – disposable income                 level of income, the risk and incidence of energy
equal to 1/2 average household income                       poverty increases. In this case, for example, a
The following table (Table 3) presents a similar            household living in a three-bed semi-detached
analysis for households with disposable income at           house of 100m2 would experience energy poverty
half the average income across all households, i.e.         at these income levels if the dwelling has a BER
where household income equals approximately                 rating of E2 or below, with the incidence of energy
€400 per week. This would be likely to closely              poverty increasing sharply for similar-income
resemble a household comprising, for example, a             households living in larger dwellings and or with
family where both parents are unemployed and in             lower energy efficiency ratings.
receipt of welfare supports. For households at this

Table 3: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Household with Income = 1/2 of Median Household
Disposable Income*

 BER Rating and     2 bed               3 bed semi-        4 bed semi-         Detached           Large house
 Dwelling Type/     apartment           detached           detached            house              (300 Sq M)
 Size               (75 Sq M)           house              house               (200 Sq M)
                                        (100 Sq M)         (150 Sq M)

                      Annual Energy Expenditure as % of Household Disposable Income**

 A1                 0.5%                0.7%               1.1%                1.4%               2.4%

 A2                 1.1%                1.4%               2.2%                2.9%               4.3%

 A3                 1.3%                1.8%               2.9%                3.4%               5.3%

 B1                 1.6%                2.2%               3.4%                4.3%               6.7%

 B2                 2.1%                2.9%               4.3%                5.8%               8.7%

 B3                 2.4%                3.4%               5.3%                6.7%               10.6%

 C1                 2.9%                4.3%               6.3%                8.2%               12.5%

 C2                 3.9%                4.8%               7.2%                9.6%               14.5%

 C3                 4.3%                5.8%               8.2%                11.1%              16.9%

 D1                 4.8%                6.7%               10.1%               13.0%              19.8%

 D2                 5.8%                7.7%               11.6%               15.4%              23.1%

 E1                 6.7%                8.7%               13.5%               17.8%              26.5%

 E2                 7.7%                10.1%              14.9%               20.2%              30.4%

 F                  9.2%                12.1%              18.3%               24.1%              36.2%

 G                  11.6%               14.9%              22.7%               30.4%              45.3%

Source: Analysis based on SEAI annual running cost estimates for domestic principal energy usage
Notes: * Where 1/2 of estimated annual median household disposable income in 2009 = €20,744 or €399 per week
** Shaded cells refer to households experiencing energy poverty based on annual running costs being greater than 10%
of disposable income
30    Warmer Homes A Strategy for Affordable Energy in Ireland




Lower-income households – disposable income
equal to 1/3rd average household income
Table 4 indicates the likelihood of energy poverty
among lower-income households where household
disposable income equates to one-third of the
average across all households, i.e. equivalent to a
weekly disposable income of around €266. In this
scenario the risk of energy poverty increases even
further compared with the preceding analysis.

Table 4: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy
Expenditure as % of Household Disposable Income: Household with Income = 1/3 of Median Household
Disposable Income*

 BER Rating and     2 bed               3 bed semi-        4 bed semi-         Detached           Large house
 Dwelling Type/     apartment           detached           detached            house              (300 Sq M)
 Size               (75 Sq M)           house              house               (200 Sq M)
                                        (100 Sq M)         (150 Sq M)

                    Annual Energy Expenditure as % of Household Disposable Income**

 A1                 0.8%                1.1%               1.7%                2.2%               3.6%

 A2                 1.7%                2.2%               3.3%                4.3%               6.5%

 A3                 2.0%                2.7%               4.3%                5.1%               8.0%

 B1                 2.5%                3.3%               5.1%                6.5%               10.1%

 B2                 3.2%                4.3%               6.5%                8.7%               13.0%

 B3                 3.6%                5.1%               8.0%                10.1%              15.9%

 C1                 4.3%                6.5%               9.4%                12.3%              18.8%

 C2                 5.8%                7.2%               10.8%               14.5%              21.7%

 C3                 6.5%                8.7%               12.3%               16.6%              25.3%

 D1                 7.2%                10.1%              15.2%               19.5%              29.6%

 D2                 8.7%                11.6%              17.4%               23.1%              34.7%

 E1                 10.1%               13.0%              20.2%               26.8%              39.8%

 E2                 11.6%               15.2%              22.4%               30.4%              45.6%

 F                  13.7%               18.1%              27.5%               36.2%              54.2%

 G                  17.4%               22.4%              34.0%               45.6%              68.0%

Source: Analysis based on SEAI annual running cost estimates for domestic principal energy usage
Notes: * Where 1/3 of estimated annual median household disposable income in 2009 = €13,830 or €266 per week
** Shaded cells refer to households experiencing energy poverty based on annual running costs being greater than 10%
of disposable income
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