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ORSE: Energy poverty affects half of households in Romania

9 November 2023

For 37.3% of households, energy has become too expensive, exceeding 10% of the daily consumption basket, according to data from the Romanian Energy Poverty Observatory (ORSE), presented in the debate “Evolution of energy poverty in Romania, in the context of the crisis,” which took place on Thursday, November 9. At the same time, two out of ten households (19.8%) drastically reduced their energy consumption for heating, finding themselves in extreme energy poverty, a situation that mainly affects rural households.

Comparatively, in 2019, before the pandemic crisis and the one generated by the war in Ukraine, the percentage of households in energy poverty because they allocated more than 10% of their expenses to energy was 27.4% of households. The situation worsened year by year: in 2020, the percentage reached 33.3%, in 2021 – to 36.5%, and in 2022 – to 37.3%.

Also, extreme or “hidden” energy poverty (measured by the M/2 indicator) affected 16% of households in 2019, so that in 2020 it will reach 19%, in 2021 – at 19.2%, and in 2022 – at 19 .8%. In ten years, compared to 2013, when the percentage was 12.2%, this phenomenon has almost doubled in size.

“The 10% indicator highlights households that allocate more than 10% of their expenses to paying energy bills, which pushes them into energy poverty. This is a more frequently used indicator that allows us to make comparisons between countries. The M/2 indicator tells the story of households in ‘hidden’ or extreme energy poverty, i.e. those who consume as much as they can afford: little. They do not have excessive energy costs because they cannot afford to consume as much as they need to heat up. Approximately 75% of the households that are in extreme energy poverty come from the countryside,” says Anca Sinea, vice president of the Center for the Study of Democracy Association and ORSE coordinator.

Energy poverty is increasingly affecting the middle class as well

Also, a third indicator that measures energy poverty is LIHC (“Low Income, High Cost”). The LIHC indicator indicates households that, after paying their energy bill, fall below the poverty line. In other words, it shows those households that are forced to make a choice between energy costs and other monthly living costs. The LIHC indicator shows that 21% of households were in this situation in 2022, double the 2021 and 2020 levels of 10.5% and well above the 2019 level of 7.8%. The ten-year evolution shows that in 2013 the percentage was 12.3%, according to data aggregated by ORSE.

The fourth energy poverty indicator analyzed by ORSE is 2M – it indicates those households that have a higher than usual consumption (national median in relation to consumption behaviour). It usually indicates homes that have high heat losses and for which the space heating effort is very high. The need for comfort implies a high cost for these homes. The 2M indicator shows that 21.7% of households were in this situation in 2022, compared to 19.5% in 2021, 20.5% in 2020, 18.9% in 2019 and 11.9% in 2013. The indicator is comparable in rural and urban environments, which indicates an equal problem of energy efficiency in country and city dwellings.

In terms of income thresholds, the population in the first deciles (the poorest citizens) is the most affected by energy poverty, in this category also the vast majority of those who heat with wood or other solid fuels can be found.

But data from recent years show an alarming increase in the phenomenon of energy poverty among middle income deciles, i.e. middle-class citizens (up to deciles 5 and 6). According to the LIHC indicator, half of the population in this middle category is affected by high energy bills.

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