Energy poverty is a major challenge in Europe, especially for vulnerable households in inefficient buildings. The text explores how policies, renovation strategies, finance and local action can work together to ensure a fair transition towards healthy, affordable and energy-efficient homes for all.
Editorial Team
(Note: Opinions in the articles are of the authors only and do not necessarily reflect the opinion of the European Union)
The relationship between energy poverty, thermal discomfort, heating and cooling insecurity, and indoor environmental quality is crucial for improving people’s well-being in the built environment, as mentioned in the new European Affordable Housing Plan. In this context, the revised EU regulatory framework following the Fit-for-55 package strengthens EU action on energy poverty by promoting the renovation of worst-performing buildings and targeted support through the recast of the Energy Performance of Buildings Directive (EPBD recast). These measures aim to improve indoor conditions while reducing energy demand and household costs, with complementary instruments such as the Social Climate Fund to mitigate adverse impacts on energy poor households during the fossil fuel transition.
Beyond regulatory and renovation measures, energy literacy also plays a crucial role: people can use energy more efficiently, lower their bills, and make choices that improve their indoor environment when they receive clear information and practical support. At the same time, renovation costs and limited financial capacity make it harder for energy-poor households to undertake building improvements that can effectively lift them out of energy poverty. Moreover, beyond energy costs, energy poverty can also have major health and social impacts. This article explores the challenges faced by energy-poor households over the past two decades and the EU initiatives designed to address them effectively.
Figure 1. Potential impacts of the EU Renovation Wave on low-income households. Source: https://ieecp.org/wp-content/uploads/2023/01/A-socially-just-EU-Renovation-Wave_Infographics_2022.png
All elements of envisioning, planning and implementing strategies to address energy poverty require significant effort from both Member States and the EU, particularly in coordinating social, energy, housing and health policies, which remain a shared responsibility. Such efforts are also bound to suffer from other limitations in the field.
There are still gaps in defining universally applicable metrics and definitions of the phenomenon, as it touches upon several aspects of everyone’s daily life (heating, cooling, cooking, lighting, hot water and other services). The diversity in national and local policies, economic, climate and societal conditions across the EU also complicates efforts to achieve a universal approach. As energy poverty reflects the interaction of multiple factors, it is difficult to isolate and analyse their individual impact. As of April 2025, 19 Member States had official definitions or equivalent indicators, and only ten had explicit reduction targets. Still, clear progress has been observed since the recast of the Energy Efficiency Directive (EED) and in the updated National Energy and Climate Plans (NECPs), with converging methods and measures. However, there is still room for improvement, especially since the transposition of the EED remains to be seen, and how these indicators are taken into account in the ringfencing of energy poverty.
In practice, the 2025 Commission assessment of final NECPs found that while most Member States now address or plan to address energy poverty, their approaches vary widely. Only a minority provides clear definitions or quantified reduction targets, and the transposition of the EED’s Article 8(3) remains incomplete, likely reflecting delays in action. Key challenges include how to reach the priority groups effectively or finding a balance between supporting as many households as possible and providing tailored support to the most in need. Similar challenges apply to the Social Climate Plans under the Social Climate Fund, which require identification of vulnerable groups affected by ETS2-related price increases.
Operationally, significant asymmetries persist in administrative capacity and data systems. While countries like France, Spain and Lithuania have set explicit savings or reduction targets and established national observatories or regular monitoring and experts’ networks, others lag in both reporting and monitoring.
Energy poverty is a problem affecting a large proportion of European households. According to Eurostat, the percentage of EU households unable to keep their homes adequately warm increased from 6.9% in 2021 to 10.6% in 2023, and decreased to 9.2% in 2024. The rise in energy prices, coupled with the COVID-19 pandemic, has made the situation even more challenging for many vulnerable households. Recent research (e.g. Carfora and Scandurra 2024) has shown that the pandemic worsened the heating challenges faced by many households, and that the first positive effects of returning to pre-pandemic levels have not been seen until 2024. According to the Commission, the recent downward trend is due to various factors, including a reduction in gas and electricity retail prices, and progress with energy efficiency measures and their targeting.
Meanwhile, there is growing recognition that the ongoing energy transition must accelerate while ensuring fairness for all households, particularly in residential buildings, which account for 75% of energy consumption in the global building sector. However, this process involves complex socio-technical challenges and demands a focus on social implications and equity.
Building renovations typically entail improving building insulation to reduce energy demand and adopting fossil-free heating solutions, often alongside non-energy-related upgrades that enhance quality of life. While households may benefit from lower energy bills and improved comfort, these advantages often come at a financial cost that might not always be affordable for vulnerable households. At the same time, energy vulnerability is associated with inefficient homes that often rely heavily on fossil fuel sources with volatile energy prices, leaving their residents highly exposed to market fluctuations. Moreover, energy poverty is not limited to the winter months. These risks become particularly acute in urban areas, where limited adaptive capacity and higher climate-change-driven heat stress interact with poor building performance, leaving households increasingly exposed to summer energy poverty and unable to cope with rising thermal discomfort. Indicatively, around 19 per cent of households in the EU are unable to keep their homes comfortably cool in summer.
Figure 2. Energy performance gap index by NUTS-1. Source: https://www.sciencedirect.com/science/article/pii/S2214629625004578#f0005
In this context, tackling energy poverty through the building sector offers a crucial dual benefit of improving buildings’ energy performance and enhancing their occupants' well-being. Prioritising deep renovations of worst-performing buildings, as required by the EPBD revision, delivers the most significant efficiency gains, drastically cutting the energy needed for heating and cooling, and making the built stock compatible with decarbonisation goals, while focusing on buildings that are disproportionately occupied by the energy poor. Better buildings mean lower energy bills, better thermal comfort and fewer physical health problems.
Figure 3. Assessment of cost-benefit relationships. Source: https://www.eurofound.europa.eu/en/publications/all/inadequate-housing-europe-costs-and-consequences)
By improving indoor environmental quality (IEQ), building renovations transform houses from drivers of energy hardship and poor health into resilient, healthy and affordable living spaces. Moreover, energy poverty also has social impacts (e.g., social isolation).
Energy policy is a shared competence between the EU and Member States. Member States have the authority to choose their energy mix, including fossil fuels, renewables and nuclear, and to set up their supply conditions. Meanwhile, the EU aims to ensure market stability, security of supply, interconnected infrastructure, and the promotion of clean energy while protecting consumers.
Over time, energy poverty has become a key policy focus. It started with safeguards for vulnerable consumers in the Gas and Electricity Directives, and expanded through measures in the recast EED and the EPBD.
The EPBD recast requires Member States to quantify people affected by energy poverty and includes measures for their alleviation in National Building Renovation Plans (NBRPs) (Article 3). The EPBD also calls for prioritising the renovation of the worst-performing buildings (Article 9 (4a)) and for integrating a social dimension into renovation policies, notably by focusing financial incentives (Article 17 (18)) as a priority on low-income and vulnerable households.
A new provision of the EED, Article 8(3), requires a minimum share of energy savings to be achieved among low-income households, people affected by energy poverty and residents of social housing. In parallel, Article 24 requires Member States to prioritise these groups within energy efficiency and consumer protection policies, promoting early preventive investments, technical assistance and access to affordable finance, and supporting the development of expert networks to ensure clear definitions, robust indicators and effective affordability safeguards. The Directive further strengthens consumer rights through information provision and awareness-raising, notably via one-stop-shops (OSS) (Article 22 (3a)). In addition, the Renewable Energy Directive includes dedicated provisions to ensure that low-income and vulnerable households can benefit from renewable self-consumption and participation in energy communities (Article 9 (7a), 18, with key Article 22).
The Governance Regulation of the Energy Union and Climate Action sets the framework and process for Member States to report on their assessment and strategy on energy poverty in their National Energy and Climate Plans (NECP, updated every five years) and about trends and achievements in their National Energy and Climate Progress Reports (NECPR, every two years). Overall, Member States have considerable flexibility in how they can address energy poverty.
The Citizen Energy Package, planned for the first quarter of 2026, is designed to embed citizens at the centre of the EU’s energy transition. It aims to combine consumer empowerment with social protection, linking affordability, deep retrofitting, renovation support and community participation to broader decarbonisation goals. Feedback indicates a focus on local action, social inclusion and support tailored for vulnerable groups such as youth, tenants, persons with disabilities, minorities and residents of rural or island areas.
Finally, the newly published European Affordable Housing Plan aims to address the housing crisis in a coordinated manner. Specifically, it aims to respond by boosting the supply of new construction and renovations, mobilising both public and private investment, enabling immediate support to affected areas while driving structural reforms, and strengthening protection for the most vulnerable groups, including students, low-income households and people experiencing homelessness. Along with the European Strategy for Housing Construction, those two documents aim to promote innovation in both construction and renovation. Building on this momentum, the first EU Housing Summit will mark the launch of a European Housing Alliance to facilitate cooperation among Member States, promote the exchange of best practices and reinforce a common approach to housing policy, with the shared objective of securing a safe, affordable and sustainable home for every European.
Figure 4. Energy poverty. Source: https://www.undp.org/es/argentina/blog/energy-poverty-so-much-more-just-lacking-service-1
Income support measures and subsidising energy bills, albeit a common measure in the EU, are only a short-term solution and not a structural one, such as building renovations. The high upfront cost of deep renovation means market-rate loans are often inaccessible or unmanageable, necessitating substantial public intervention to de-risk private financing and replace purely commercial models with socially driven ones. This structural impediment means that financial strategies must prioritise affordability for homeowners or tenants over traditional rates of return. These challenges are further aggravated by households’ limited decision-making power, particularly for tenants, and OSSs can help address this gap by mediating with landlords and guiding households towards accessible financing solutions.
To bridge this gap, public authorities must employ a sophisticated mix of funding instruments. The equitable solution involves blended finance, which combines non-repayable grants with subsidised or soft loans and guarantees. Key EU mechanisms, such as the Social Climate Fund (SCF) and the large-scale Recovery and Resilience Facility (RRF), are essential in directing capital specifically towards the worst-performing social and residential buildings. To complement these, innovative financing mechanisms such as crowdfunding platforms, on-bill financing, pay-as-you-save schemes and energy performance contracting can mobilise additional capital and increase participation, particularly for households for whom traditional lending channels remain inaccessible.
Finally, the justification for public investment must evolve beyond financial payback periods. A comprehensive Social Cost-Benefit Analysis (SCBA) is therefore necessary, as it monetises the substantial non-energy benefits. These include quantifiable reductions in public healthcare expenditure from improved indoor air quality and thermal comfort, increased productivity and educational outcomes and reduced social welfare costs. By recognising that building renovations generate health and economic returns that far outweigh the energy savings alone, the SCBA reframes the high upfront cost as a sound, preventive public investment that aligns perfectly with the Energy Efficiency First principle.
Europe is addressing the interrelated challenges of housing and energy inequalities through a strategic and coordinated body of work, all aimed at fostering access to affordable, inclusive and sustainable living for marginalised groups.
This strategic direction is initially supported by two key initiatives:
On the ground, Citizen-Led Renovation (CLR) reflects the work that is done under the energy communities and showcases citizen-led renovation cooperatives that act as trusted partners, support local skills and adapt services, from audits to full OSS services, to local conditions.
When it comes to projects, the HouseInc project sets the foundational policy context by advancing measures that boost housing access and sustainability. It produced a crucial atlas that maps and analyses 222 solutions across Europe and is focused on affordability, sustainability and inclusivity. For rural and peri-urban areas, RENOVERTY offered tailored Rural Energy Efficiency Roadmaps (REERs) that have successfully influenced 60 policies while reducing logistical and financial burdens and ensuring social justice in renovations across Central and Eastern Europe, South-East Europe and Southern Europe countries. In a similar direction but policy-targeting focus, ENPOR focused on energy poverty in the private rented sector. It established REACT Groups, developed new tools like the Energy Poverty Dashboard and Split-Incentives Calculation Tool and co-created 10 new policy measures, engaging approximately 300,000 households.
Figure 5. Key figures extracted from the Energy Poverty Dashboard. Source: https://ieecp.org/wp-content/uploads/2024/11/ENPOR_Deliverable_5.4_Policy-Recommendations_Final-1.pdf
At the governance level, SEEDMICAT ensures the Multiple Impacts of carbon neutrality (such as health and supply security) are incorporated into the implementation of the Energy Efficiency First (EE1) principle with the use of MICATool, providing a data-driven basis for energy transition planning.
Scaling up implementation is demonstrated by several projects. REVERTER developed nine tailored renovation roadmaps and established OSSs, resulting in the renovation of 403 buildings. Energy Poverty Zero (EP0) scaled up deep energy retrofits using industrialised prefabricated solutions (Energiesprong), resulting in 1,150 zero-energy retrofits and a 15% cost reduction.
CEESEN-BENDER looks at supporting the renovation journeys for vulnerable homeowners and renters living in Soviet-era multiapartment buildings in five CEE countries: Croatia, Slovenia, Estonia, Poland, and Romania, while ComActivate is institutionalising municipality-embedded resource centres as hubs for engaging with energy-poor neighbourhoods and facilitating agreements within homeowner associations of multi-apartment buildings, and developing Neighbourhood Energy Sufficiency Roadmaps in four municipalities in Lithuania, Bulgaria and Hungary.
LIFE REHABITA is fostering deep energy renovations of the energy inefficient homes of vulnerable families in the municipalities of Lorca (ES), Ploiești (RO), Plovdiv (BU), Saldus (LV) and Gospić (HR) and setting up ReHABITA Offices (one-stop-shops) to deliver an integrated home renovation service.
Finally, ensuring long-term financial viability, LEG-UP is developing an integrated model combining social mortgages, green renovation financing and OSS support. This aims to mobilise over €2 billion in private investment to enable low-income buyers to afford and renovate homes to high-energy-efficiency standards.
Several technical articles about RENOVERTY, REVERTER and LEG-UP projects have been published throughout this month in BUILD UP.
Europe will not achieve a fair energy transition unless every home becomes a safe, efficient and healthy place to live. Tackling energy poverty requires a coordinated approach that links EU policy, national action and local implementation. Renovating the worst-performing buildings is vital to reducing energy use, protecting vulnerable households and improving indoor comfort, yet financial and administrative barriers persist. Emerging EU tools, citizen-driven initiatives and innovative financing models show that large-scale, just renovation is possible. Ultimately, aligning social protection with deep, affordable renovation is essential to ensure the transition strengthens, not sidelines, those most at risk.
December’s Topic of the Month in BUILD UP is ’Energy poverty and vulnerable people: how not to leave them behind in the energy transition of the buildings sector’. We welcome contributions from professionals, researchers, local authorities and organisations working to advance energy efficiency in the built environment. Readers are invited to share articles, technical insights, project results, case studies, news, events or training materials that can support the platform’s knowledge base and strengthen collaboration across Europe’s renovation community.
Visit the BUILD UP ‘How to Contribute’ page and follow the process.
