How to deal with rising energy prices: financial compensation for all VS targeted energy efficiency and renewable energy measures for low-income households

Presentation by Dr. Tilman Hesse, ECEEE Summer Study 2024, Center Parcs Lac d'Ailette, France, 13.6.2024

1. www.oeko.de
How to deal with rising energy prices: financial compensation for all
VS targeted energy efficiency and renewable energy measures for
low-income households
Tilman Hesse et al., Oeko-Institut
ECEEE Summer Study 2024 13
th
June 2024

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Co-authors
•Sibylle Braungardt (Oeko)
•Emma Kreipl (Oeko/University ofBayreuth)
•Katja Schumacher (Oeko)
•Viktoria Noka (Oeko)
•Nelly Unger (Oeko)
•Andreas Müller (e-think)
•Lukas Kranzl (e-think)
Funding: European Climate Foundation
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)

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Options tosupport low-incomehouseholdswhenenergypricesrise
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Directsupport/
compensation
Investment support for
EE & RES measures
●Fast & easy
implementation
●Onlyshort-term
effect
●Possibilityoffossil
lock-in
●Long-term energycost
reduction
●Long-term GHG
emissionssavings
●Increased
independence/
resilience
●Both options: targetedsupport essential forefficientuseofgovernmentmoney!
●Longer
implementation
times

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Focus ofthestudy–3 parts
1.Overview of funding needs for direct compensatory measures in seven EU
countries under different price projections
2.Country-specific sets of EE & RES measures and their impact on low-income
households in seven EU countries. Estimates include the impact on energy
consumption and greenhouse gas emissions
3.Overview of funding schemes at EU level and in selected Member States to
finance the above-mentioned measures
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)

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www.oeko.de
Focus ofthestudy–3 parts
1.Overview of funding needs for direct compensatory measures in seven EU
countries under different price projections
2.Country-specific sets of EE & RES measures and their impact on low-income
households in seven EU countries. Estimates include the impact on energy
consumption and greenhouse gas emissions
3.Overview of funding schemes at EU level and in selected Member States to
finance the above-mentioned measures
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)

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Directcompensation
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)80
100
120
140
160
180
200
220
Aug Sept Oct Nov Dec Jan Feb Max
2022/2023
Average
08/22-02/23
Average
2021-2023
2022 2023 - Scen 1 Scen 2
2015=100
France Germany Italy Spain Greece Romania Hungary

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Investment support forEE & RES measures–methodology
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
National
buildingstocks
(INVERT)
Share oflow-
income
households
(EU-SILC)
Typicalenergy
carrier
distribution&
consumption
1. Outcome
•energyuse
•GHG
emissions
EE & RES
measuresin
eachcountry
Typicalenergy
savingsper
measure
Realisation
factorsin 2-
yearperiod
2. Outcome
•energy
savings
•GHG
savings
1. 2.

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Housing type and shareoflow-incomehouseholds
•Definition low-incomein this
graph(followingEU-SILC):
Households income of below
60% of median household
income in each country
•Germany and France: High
share of low-income
households in MFH
•Greece and Romania: High
share of low-income
households in SFH
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Share oflow-incomehouseholds
House flat
Germany 11% 19%
Greece 24% 16%
Spain 22% 21%
France 10% 23%
Italy 20% 20%
Hungary 13% 11%
Romania 32% 5%

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Retrofitting measures: costsand energysavings
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
low medium high
low
medium
high
Costs
Time and effort
Heat
pump
Windows
Hydraulic
balancing
Smart thermostat
Windowfoil
Pipe
Insulation
15% -
20%
10% -14%
5% -9%
0% -4%
Energy savings
in %
tenant
landlord
Main actors

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List ofmeasures
•Building envelope
•Outer wall / cavitywall insulation
•Roof / atticinsulation
•Replacingoldwindows
•Heatingsystem/ hotwater
•Installingheatpumps
•Installingsolar thermal collectors
•Hydraulicbalancing
•Electricity
•InstallingPV
•Campaign
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)

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Investment support forEE & RES measures–methodology
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
National
buildingstocks
(INVERT)
Share oflow-
income
households
(EU-SILC)
Typicalenergy
carrier
distribution&
consumption
1. Outcome
•final energy
use
•GHG
emissions
EE & RES
measuresin
eachcountry
Typicalenergy
savingsper
measure
Realisation
factorsin 2-
yearperiod
2. Outcome
•final energy
savings
•GHG
savings
1. 2.

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ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Final energysavings

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ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
GHG emissionsavings

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SupportingLow-Income Households –GoodPractices
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Stromsparcheck (ElectricitySavings
Check)
(Germany)
Light forRomania
(Romania)
Target groupRecipients of social benefits Vulnerable households
Key actorsCaritas Germany and the Organization of Agencies
for Energy and Climate Protection Germany (eaD)
Supported by the Federal FederalMinistry for
Economic Affairs and Climate Action
Charity, commercial organisation, crowdfunding,
media, NGO and private company
Financing Funded through the National Climate Initiative (NKI)
which is funded via EU ETS revenues
Private funds, Banks and Companies
Description→Trained electricity-saving assistants advise
households in their homes on energy-saving options
for electricity, water, and heat:
→“emergency aid” (e.g. plug strips, LEDs, energy-
saving shower heads) are directly installed
→Supports families who do not have access to
electricity.
→The project installs PV systems that provide free
electricity

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Conclusions
ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Directfinancialsupport isa useful
short-term solution, but shouldbe
targetedat low-incomehouseholdsonly
Lower riskofenergypoverty
Reducedfossil fuelimportdependency
Support forstructuralEE & RES
measuresenableslong-term energy
and GHG emissionssavings
Framework fortargetedsupport neededbothforowner-occupiedand rentedbuildings
https://www.oeko.de/fileadmin/oekodoc/Targeted_measures_final_report_web.pdf
Lower riskofenergypoverty
Higher resiliencetofutureenergypriceshocks

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ECF study on short-term EE & RES measures | ECEEE 2024 | Hesse et al. (Oeko-Institut)
Contact
Tilman Hesse
Senior Researcher
E-Mail:[email protected]