A proposal for implementation of an energy cheque for Spanish vulnerable households

Abstract

Energy poverty was firstly identified as the inability of a household to keep home adequately warm. Since 2001, this issue has been progressively tackled by the different EU Member States with mitigating and structural measures. In 2018, the Spanish Government introduced the Thermal Social Allowance (TSA) for vulnerable consumers to support heating costs. This aid considers the climate zone but not the household characteristics. This paper proposes a bottom-up methodology to characterise Spanish households’ theoretical thermal-energy expenditures (heating and domestic hot water), considering climate zone, basic dwelling’s characteristics, and household size. This analysis, conducted at high geographical resolution, makes it possible to critically evaluate the current TSA policy in the country and to present a proposal for an energy-needs-based Thermal Energy Cheque (TEC). The assessment shows that Spanish household's ‘winter energy needs’ require an average annual expenditure of €1,132. In 2019, the Government took a first step by budgeting €75m for the TSA policy. In comparison, the implementation of the TEC would require an annual budget six times higher. The TEC policy proposal makes it possible to consider the differences in household characteristics and might allow policy makers to assess the socio-economic impact of changes in energy prices and taxation.