Policy paper on the EU experience on clean energy affordability for households

What can we learn about different approaches to the challenges of keeping energy bills in check and mitigating hardship for vulnerable consumers by employing a comparative analysis between the EU and Australia? This question is at the heart of a joint EU-Australia project that combines analysis of energy prices and analysis into impacts for vulnerable groups. The EU and Australia govern through supranational (EU) and supraregional (Australian Federation) arrangements, both electricity markets cross vast physical space and jurisdictional boundaries and there is variegation of experiences across member states (EU) and subnational states (Australia) in terms of market liberalisation and progress of the energy transition. We discuss how these shared features shape the efforts and performance on energy efficiency, affordability and energy poverty. While the EU favours a more coordinated approach to addressing affordability and energy poverty (positioning energy efficiency as one of the key measures to address these issues), Australia’s approach privileges market actors and self-regulation and promotes consumer choice and empowerment. We analyse how these diverging factors have shaped governance and outcomes for energy affordability. We also analyse data to show that while the share of household income spent on energy is on average lower in Australia than the EU, the dispersion of spending between the different income groups is larger in Australia. We further compare energy prices and developments between a range of EU member states and Australia and assess impact factors over time. Finally, we assess how, by whom and if at all vulnerability and energy poverty are defined, measured and reported. Our comparative perspective enables us to draw insights on best practice approaches to address energy affordability including energy efficiency and sufficiency, financial support, regulatory instruments, and governance and regulatory architecture.