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Income, energy expenditure and housing in Madrid:retrofitting policy implicationsCarmen Sánchez-Guevaraa, Ana Sanz Fernándeza & Agustín Hernández Ajaa

a School of Architecture (ETSAM), Technical University of Madrid (UPM), Madrid, Spain.Published online: 17 Dec 2014.

To cite this article: Carmen Sánchez-Guevara, Ana Sanz Fernández & Agustín Hernández Aja (2014): Income,energy expenditure and housing in Madrid: retrofitting policy implications, Building Research & Information, DOI:10.1080/09613218.2014.984573

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RESEARCH PAPER

Income, energyexpenditure and housing inMadrid: retro¢tting policy implications

CarmenSa¤ nchez-Guevara, Ana Sanz Ferna¤ ndez and Agusti¤n Herna¤ ndez Aja

School of Architecture (ETSAM),Technical University of Madrid (UPM),Madrid,Spain.E-mails: carmen.sanchezguevara@upm.es, asanz@ee.upm.es and agustin.hernandez@upm.es

Fuel poverty can be defined as ‘the inability to afford adequate warmth in the home’ and it is the result of the combination

of three factors: low household income, lack of energy efficiency and high energy bills. Within this context, the present

research is aimed at characterizing, for the first time, the housing stock of fuel-poor households in the Autonomous

Region of Madrid. Fuel poverty incidence was established and households were divided into six different groups

according to their relative position regarding fuel and monetary poverty. The housing stock of each group is

characterized and those households most in need are identified. These results enable energy retrofitting priorities to be

established, focusing on the needs of the different household groups and accounting for their housing stock

characteristics. This allows Spanish energy retrofitting policies to be assessed for their capability of tackling fuel

poverty and makes it possible to suggest some improvements.

Keywords: energy consumption, energy policy, fuel poverty, housing stock, low income, retrofit, vulnerability

IntroductionRelevance of researchThis research falls within the context of the Euro-pean Union (EU), which has established a priorityto develop an inclusive economy with a strongemphasis on job creation and poverty reduction(European Commission, 2010a). One of the targetsof this strategy is the reduction of 20 millionpeople in or At Risk Of Poverty or social Exclusion(AROPE). This concept sets the link betweenpoverty and fuel poverty, where poverty is definedas the share of the population in at least one of thefollowing three conditions:

. At risk of poverty, meaning below the povertythreshold (60% of the median income).

. In a situation of severe material deprivation, i.e.people who cannot afford at least four of thenine following items: 1, (arrears on) mortgage orrent payments, utility bills, hire purchase instal-ments or other loan payments; 2, one week’sannual holiday away from home; 3, a meal withmeat, chicken, fish (or vegetarian equivalent)every second day; 4, unexpected financialexpenses; 5, a telephone (including a mobile

phone); 6, a colour television; 7, a washingmachine; 8, a car; and 9, heating to keep thehome adequately warm.

. Living in a household with a very low workintensity.

Thus it can be seen that tackling fuel poverty is framedunder EU energy policies and, therefore, the real scopeof fuel poverty must be appraised so as to implementthe appropriate measures. Furthermore, it must behighlighted that there is a lack of this kind of researchin the Spanish territory. Although some previousstudies exist (European Fuel Poverty and EnergyEfficiency Project, 2009; Tirado Herrero, LopezFernandez, & Martın Garcıa, 2012), they do notdeepen the overlap between monetary and fuelpoverty nor characterize the housing stock.

Aims and objectivesThis paper explores the incidence of fuel poverty inthe Autonomous Region of Madrid through theexploitation of available statistical data in order toevaluate the suitability of the current energy retrofit-ting policies. To this end, the following objectives arecovered:

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. to define the relationship between fuel and monet-ary poverty and their possible overlap

. to characterize households’ building stock inrelation to their position regarding monetary andfuel poverty

. to advance the knowledge of priority housingstock renovation according to household fuelpoverty conditions

. to determine the main limitations of the currentSpanish energy retrofitting policies to tackle fuelpoverty

Fuel povertyDe¢nition andmeasurementThe fuel poverty concept has its origin in UK, wherethe Warm Homes and Energy Conservation Act (UKParliament, 2000) defined it as follows:

a person is to be regarded as living ‘in fuelpoverty’ if he is a member of a household livingon a lower income in a home which cannot bekept warm at reasonable cost.

In order to establish a measurement method, the UKDepartment of Trade and Industry (DTI) (2001) fol-lowed Boardman’s (1991) definition in which a house-hold suffers from fuel poverty when it is unable to haveadequate energy services for 10% of householdincome. Thus, the fuel poverty ratio (FPR) is defined as:

FPR = fuel costs (modelled usage × price)income

where fuel costs includes heating, hot water, lightingand other energy services. The adequate level ofwarmth for heating is defined as 218C for the mainliving area and 188C for other occupied rooms, basedon recommendations by the World Health Organiz-ation (WHO) (1987). If this ratio is greater than 0.1,then the household is considered fuel poor.

Nevertheless, Hills (2012) questioned this fixed thresholdand proposed a new approach. He proposed that house-holds suffer from fuel poverty when the energy cost ofensuring adequate warmth is above the average, and theremaining income, after payment of bills, is below theofficial poverty line. This approach, called the LowIncome High Cost Definition, is the new legal frameworkto monitor fuel poverty in England (DECC, 2014).

As the traditional threshold of 10% of householdincome made it difficult to extrapolate it to the restof Europe and to make any comparative analysisamongst European countries, Healy and Clinch

(2002b) proposed a new consensual approach basedon six social indicators of fuel poverty. These indi-cators were taken from the 1994–2001 EuropeanCommunity Household Panel (ECHP) (EuropeanCommission, 1994), and are combined into a consen-sual approach to fuel poverty by analysing subjectiveand objective data on the presence of mould, lack ofcentral heating and the ability to keep warm. TheECHP survey criteria, conducted by EUROSTAT,was incorporated in 2004 into the European UnionStatistics on Income and Living Conditions (EU-SILC) and remains in force. This study defined thecharacteristics of households that made them more vul-nerable to fuel poverty: single-parent families,especially those with children under 16 years of ageand pensioners, living in an apartment block, separ-ated, divorced or widowed individuals, those with apoor education, the unemployed and social servicebeneficiaries, and, finally, tenants.

Finally, the Commission Working Paper ‘An EnergyPolicy for Customers’ (European Commission,2010b) establishes that fuel-poor households couldbe defined as those that:

spend a higher proportion of their total expenseson energy products than a proposed thresholdvalue [ . . . ] close to the double of the nationalaverage ratio number.

It is important to note that these studies included noevaluation of fuel poverty related to high temperaturesor cooling requirements, although southern Europeancountries (Portugal, Spain, Italy and Greece) stillshowed the highest levels of fuel poverty (Healy,2004). Earlier methods were strictly concerned withthe inability to achieve adequate warmth in coldmonths, and it is thus necessary to start working onnew approaches to fuel poverty in southern Europeancountries. In line with that (it must be highlighted asa spearhead research in this field), some studiescarried out in Greece (Santamouris et al., 2007; Santa-mouris, Paravantis, et al., 2013), in which the relationbetween fuel poverty, low income and housing stockcharacteristics was stated, showed higher levels offuel poverty among low-income households, presum-ably caused by the low thermal performance of theenvelope. Furthermore, poor indoor thermal con-ditions in low-income dwellings during heatwavesand cold winters were demonstrated in Athens(Sakka, Santamouris, Livada, Nicol, & Wilson,2012; Santamouris, Alevizos, et al., 2013).

Fuel poverty studies in SpainAlthough the concept of ‘fuel poverty’ is yet to be offi-cially defined in Spain, some studies in recent yearshave tried to evaluate the incidence of fuel poverty inSpain. This is the case of the European Fuel Poverty

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and Energy Efficiency Project (2009), which consistedof a cross-sectional analysis in France, Belgium, theUK, Italy and Spain using EU-SILC and followed themethod developed by Healy and Clinch (2002b).This research defined the incidence of fuel poverty aswell as its relationship to urbanization level, buildingtypes, tenure status, family composition, householdincome and fuel poverty.

The aim of the European Energy Ambassadors project(Ecoserveis, 2009), another relevant study in Spainfrom 2009, was to develop practical, sustainable sol-utions to fuel poverty and achieve energy savings inhouseholds through the mediation of social workers.In the REPEX project (Tirado Herrero et al., 2012),fuel poverty in Spain was studied using two availablemethods: one based on income and expenditure, likethe UK existing one, and the other based on house-holders’ self-perception, developed by Healy andClinch (2002a). Fuel poverty was first studied usingthe income and expenditure method. In Spain, thereis no equivalent to the English Housing Survey, andthe study used in this research was the EPF (FamilyBudget Survey), which evaluates real, not estimated,expenditure, and therefore does not reflect house-holds that are unable to afford adequate warmth.Results for 2010 showed that approximately 12%of Spanish households were expending more than a10% of their income in energy bills and thus theywere considered to experience fuel poverty con-ditions. The second method used the EU-SILC forSpain, which collects answers by householdmembers and thus yields quite subjective results.However, as mentioned above, this is the onlyapproach that permits pan-European transnationalstudies. Results from this approach showed thatwater leaks and dampness had the greatest impacton fuel poverty measures, affecting almost 20% ofsurveyed households. In 2010, around 7% werefound to be unable to afford adequate warmthduring the cold months.

Both national and regional data from REPEX werepresented. According to the income-expendituremethod, the regions with the highest level of fuelpoverty were the coldest ones, although according tothe self-reporting method the poorest areas were themost temperate ones. This apparent paradox couldbe explained by a lower energy efficiency in southerndwellings or differences in householders’ self-perceivedcomfort temperatures.

The few studies on fuel poverty carried out in Spainhave highlighted the need for more knowledge aboutthis field. Furthermore, these studies do not properlyreflect the climatic variation between northern andsouthern Spain. Given that all studies are related tocold temperatures, fuel poverty caused by high temp-eratures should also be explored. In Spain, differences

between cooler and warmer regions undoubtedly leadto a diversity of fuel poverty situations.

Relevant energy policies regarding Spanish fuel-poorhouseholdsThe EU has taken some steps forward in this field. TheThird Energy Package for the energy market legislationincluded two directives related to electricity and the gasmarket: 2009/72/EC (European Parliament, 2009a)and 2009/73/EC (European Parliament, 2009b),which brought in what it called ‘vulnerable clients’, aconcept that should be defined by each country. Simul-taneously, in Spain the social bonus was implementedthat froze electricity prices from 2009 (Gobierno deEspana, 2009). It benefited households with a con-tracted power lower than 3 kW, households consistingof retired people who were over 60 years of age, andlarge families or households in which all memberswere unemployed. The new law 24/2013 (Gobiernode Espana, 2013a), derived from Directive 2009/72/CE, has recognized the existence of a vulnerable consu-mer, which is defined just as in the previous law, butwith a family income threshold limit that at the timeof this writing is yet to be defined.

Later on, the European Commission, aware of theincreasing number of fuel-poor households within theEU, stated that the pace of energy retrofits for dwell-ings should be accelerated. It was also stated thatmember states should invest money from StructuralFunds and Cohesion Funds in energy-efficiencymeasures to fight fuel poverty (European Parliament,2012). All this creates an urgent need for memberstates to develop their own methods to appraise fuelpoverty, as expressed by the European Economic andSocial Committee (2013).

In Spain, the ‘State Plan for Promotion of RentedHousing, Building Rehabilitation and Urban Renewaland Regeneration 2013–2016’ (Gobierno de Espana,2013c) provides the programme for building retrofits.Public encouragement of energy retrofitting is struc-tured through subsidies and loans directed at reducingthe energy demand by at least the 30% through theimprovement of thermal enclosure and facilities ofdwellings. The housing stock that is eligible for thisaid is limited to buildings constructed before 1981,when the first Spanish thermal performance regulationwas launched. Within the framework of this plan, ‘Law8/2013 of Urban Rehabilitation, Regeneration andRenovation’ (Gobierno de Espana, 2013b) is devel-oped. For the first time, fuel poverty is mentioned inone of the objectives of a law: ‘to fight against fuelpoverty through efficiency and energy saving actions’.However, it does not offer any definition or specificactions related to fuel poverty. In addition, theSpanish Technical Code (Ministerio de Fomento,2013), which contains the required thermal conditions

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of buildings, has been modified as a result of this lawand now any retrofitting work must accomplishminimum thermal requirements.

Apart from the above, there are some energy policiesthat are connected to the fuel poverty issue as theyaim at the reduction of building energy consumption.Royal Decree 235/2013 (Gobierno de Espana,2013d), which is derived from Directive 2010/31/UE(European Parliament, 2010), established a mandatorybuilding energy performance certification for buildingsfor rent or sale. It also established that all new build-ings must be nearly zero-energy buildings (NZEB)from 2020 onwards. These certifications must includepossible energy improvements with a cost–benefitevaluation.

In addition, the Energy Saving and Efficiency Plan2011–2020 (Ministerio de Industria Turismo yComercio, 2011), based on Directive 2006/32/EU(European Parliament, 2006) and later on 2012/27/EU (European Parliament, 2012), is focused on thestrong reduction of energy consumption in severalareas. One of these areas is the building and facilitysector that shapes the 57.7% of all the budget. TheEnergy Retrofitting of Existing Buildings AidScheme (PAREER by its initials in Spanish; Gobiernode Espana, 2013e, 2013f) is one of the action lines ofthis plan and it encourages dwelling energy improve-ments through subsidies up to the 30% of the costsfor thermal enclosure refurbishment and loans forrenovation of building facilities (heating, ventilationand air-conditioning (HVAC), lighting and elevators).

Material andmethodsMeasuring fuel poverty through statistical dataThe Autonomous Region of Madrid was chosen as asuitable case study for this research due to statisticalreasons. The official national statistics are brokendown by region. Madrid is one of the AutonomousRegions with the highest population concentrated ina region with the same weather conditions, whichmakes household energy needs comparable.

The first step of the study consisted of exploring the inci-dence of fuel poverty within the Autonomous Region ofMadrid and determining the most suitable method toachieve the objectives of the study. For that purposeboth the main accepted methods explained in the pre-vious section, the consensual approach and theincome and expenditure one, were taken into account.

The consensual approach was explored through theEU-SILC survey (Instituto Nacional de Estadıstica,2006), as it contains breakdown data by regions.From this survey three indicators were evaluated:ability to pay to keep the home adequately warm;

arrears in utility bills; and the presence of leakingroofs, damp walls or rotten window frames. Thesample size of this survey is 1536 households for theAutonomous Region of Madrid. Spatial raisingfactors provided by the National Statistics Institutefor each sample household were used to raise sampledata to the whole population of the region (InstitutoNacional de Estadıstica, 2013).

On the other hand, the income and expenditureapproach was developed by using the Spanish FamilyBudget Income survey, EPF (Instituto Nacional deEstadıstica, 2004). The EPF was explored in order toobtain data on household incomes, derived from netmonthly income per household, and expenditure onenergy bills, constructed using bills for electricity, gasand other fuels used in primary and holiday homes.Despite the fact that this is a national survey and thebest data source in order to appraise households’energy consumption, it contains real expenditure, notestimated, which is one of its limitations. The samplesize of this survey is 1820 households for the Auton-omous Region of Madrid. In this case spatial raisingfactors, provided by National Statistics Institute foreach household, were used too in order to raisesample data to the whole population (Instituto Nacio-nal de Estadıstica, 2010).

Once the overall framework for fuel poverty was ana-lysed, the income expenditure approach was chosen forthe rest of the study, aimed at ascertaining the relation-ship between fuel and monetary poverty as well ascharacterizing the stock of dwellings where thesedifferent population groups live. Thus, one of themain reasons for the choice of this method was thatthe EPF gathers not only data on income and expendi-ture, which facilitates the analysis of monetary and fuelpoverty, but also broader data on main housing con-ditions than the EU-SILC ones. Furthermore, despitethe limitations detected in EPF data which are basedon real expenditure (instead of a modelled one), it con-tains information related to high temperatures (coolingexpenditure) unlike the EU-SILC survey.

Another survey, explored to expand on some infor-mation, was the Households and Environment Survey(Hogares y Medio Ambiente, HYMA) (InstitutoNacional de Estadıstica, 2008), a national survey thatcontains information related to household habits, con-sumption patterns and attitudes towards environ-mental issues.

Household classi¢cation: incomeand energy bills’expenditureOnce the general frame for fuel poverty was estab-lished, the relationship between fuel and monetarypoverty was developed on the basis of statistical datafrom the EPF of 2011. To that end, households were

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classified according to their relative position regardingmonetary and fuel poverty thresholds.

The monetary poverty threshold was calculated as60% of the median income value, following theEUROSTAT method. To this end, income was equiva-lized by taking into account household consumptionunits, using the modified Organisation for EconomicCo-operation and Development (OECD) scale (1.0for the first adult, 0.7 for the second and each sub-sequent person aged 14 and over, and 0.5 each childunder 14).

The fuel poverty threshold was established as anexpenditure of the 10% of income on energy, in linewith existing fuel poverty research in Spain (TiradoHerrero et al., 2012). Given that income was equiva-lized through OECD-modified equivalizing factors,and that the same factors are commonly used forexpenditure equivalization (Instituto Nacional de Esta-dıstica, 2012), these same factors were used for energyexpenditure. Thus, fuel poverty ratio (FPR) was calcu-lated as follows:

FPR = equivalised real fuel costs

equivalised income

In addition, vulnerability towards each type of povertywas considered and, hence, thresholds of medianincome and 5% of expenditure were also considered.

Thus, households were gathered into six differentgroups according to previously defined thresholds.

Characterization of the housing stockThe relation between the six household groups andtheir housing stock characteristics was established.

All building-related variables available in existing stat-istics were explored: dwelling type, year of construc-tion, heating availability, living area per dwelling andper household member.

ResultsIncidence of fuel povertyThe overall incidence of fuel poverty in the Auton-omous Region of Madrid was explored through bothestablished methods, the income and expenditureapproach and the consensual one, as explained above.

The income and expenditure method was developed bycalculating the percentage of households that spendmore than a certain percentage of their income onenergy bills. Figure 1 shows the evolution of householdexpenditure from 2006 to 2011. The fuel povertythreshold, the expenditure of more of the 10% ofhousehold income, is plotted as well as 5%, 15%and 20% in order to give a broader vision of theproblem. According to this method, 13% of house-holds were suffering from fuel poverty in 2011, twice

Figure 1 Trends in household energy bills’ expenditure as aproportion of income

Figure 2 Trends in fuel poverty indicators according to the consensual approach compared with winter degree-days

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the percentage of the fuel-poor households existing in2008. Besides that, there is a general increase in house-hold expenditure percentage, which reflects a rise in theeffort needed by households to pay for their energyrequirements and thus in the number of fuel-poorhouseholds too.

On the other hand, the consensual approach wasexplored through three indicators from the EU-SILC:

ability to pay to keep the home adequately warm;arrears in utility bills; and the presence of leakingroofs, rising damp or rotten window frames. Figure 2shows the percentage of households who declaredthemselves to be suffering from any of these problemsfrom 2006 to 2011 along with the winter degree-daysfor this period. It can be seen there is a relationbetween winter conditions and the presence of leakingroofs, rising damp or rotten window frames, but not

Figure 3 Trends in energy prices compared with arrears in utility bills and the ability to a¡ord warmth. Source: Instituto Nacional deEstadi¤ stica (2011)

Figure 4 Households displayed according to equivalized income and expenditure on energy bills

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with the other two variables: the ability to pay to keepthe home adequately warm and arrears in utility bills.

The upward trend in arrears seems to be related to arise on energy prices as shown in Figure 3, while theability to afford warmth seems to remain independent,perhaps due to its subjective nature. Furthermore, theincrease in energy prices seems to be also related toan increase in the percentage of income that familieshave to spend on energy bills, as reflected in Figure 1.

After exploring both fuel poverty methods, some limit-ations were detected in the implementation for theAutonomous Region of Madrid. Firstly, the incomeand expenditure approach, carried out through datafrom the EPF, only reflects households’ actual expendi-ture, not their real needs. Secondly, the consensualapproach is based on indicators derived from the EU-SILC that are mainly focused on winter necessities,which underrates Madrid’s extreme summer tempera-tures and related cooling needs, reflected in a presenceof air-conditioning devices in the 43.5% of households(HYMA).

Nevertheless, the income and expenditure approachwas considered the most suitable method for the restof the study given that it reflects all households’energy service expenditure, which includes bothheating and cooling. It was also chosen because it con-tains data from housing stock characteristics.

Monetary and fuel poverty overlap in householdsGiven the overall incidence of fuel poverty, householdswere divided into groups in order to understand moredeeply the relation between fuel and monetary poverty.For that purpose, EPF data from 2011 were explored.Figure 4 shows households plotted according toincome level (y-axis) and energy bills’ expenditure (x-axis). Along with households some relevant referencethresholds were plotted as well to enable householddivision following the next steps:

. First, the monetary poverty threshold was estab-lished and, consequently, households weredivided into two groups: poor ones and not poorones.

. Second, the fuel poverty threshold, established asan expenditure of more than the 10% of incomeon energy, was used to divide households intofour groups: the fuel and monetary poor ones;the monetary poor ones; the fuel-poor ones; andthe not poor ones. In addition, the 20% thresholdwas plotted in order to understand the representa-tiveness of the sample of households in a ‘severefuel poverty’ situation.

. Third, the group of households not suffering fromany kind of poverty was considered to be nothomogeneous. This allowed for the existing

Figure 5 Households division into groups according to fuel andmonetary poverty thresholds

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differences among households’ relative distancesto previously established poverty thresholds to betaken into account. Some households were closerto these thresholds than the others and, therefore,were considered to be in a more vulnerable situ-ation. For that reason this group was divided by

using the median income, reflecting a monetaryvulnerability situation. In addition, withinthis monetary vulnerability group the 5% ofexpenditure threshold was utilized to subdivide iton the basis of their vulnerability towards fuelpoverty.

The division of households created six householdgroups, as it can be seen in Figure 5. The following isa more detailed explanation of these groups:

† Group 1: below both the monetary and the fuelpoverty line. Households in this group fall withinboth poverty types (energy expenditure andincome levels).

† Group 2: below the monetary poverty line but abovethe fuel poverty line. This group consists of householdswhose income is less than 60% of median income.

† Group 3: below the fuel poverty threshold but abovethe monetary line. Formed by households whoseexpenditure on energy bills is above 10% of theirincome but whose income is more than 60% ofmedian income.

† Group 4: monetary and fuel poverty vulnerability:households whose income level is above the monet-ary poverty line but under the median income level,and whose energy expenditure is between 5% and10% of their income. These households were con-sidered vulnerable because an increase in their expen-diture or a decrease in their income would place thembelow one of the two poverty lines.

† Group 5: monetary vulnerability: these households’income is more than 60% of median income butbelow the median income line, and their energyexpenditure is less than 5% of their income. These

Table 1. Household classi¢cation according to income andexpenditure

Group Criteria Number ofhouseholds

1 Monetary and fuel poverty 164 445

2 Monetary poverty 266 085

3 Fuel poverty 144 819

4 Monetary and fuelvulnerability

280101

5 Monetary vulnerability 326 845

6 Not vulnerable 1181778

Figure 6 Household distribution according to income andexpenditure

Figure 7 Housing stock qualitative variables: dwelling type, year of construction and heating availability

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households could be considered vulnerable from astrictly monetary point of view.

† Group 6: not vulnerable: this group is stable in termsof both monetary and energy expenditure, and dis-tanced from vulnerable positions.

Based on the results displayed in Table 1 and Figure 6,it can be stated that 24% of Madrid’s householdssuffer from some kind of poverty. According to thisclassification, the 18% of households suffer from mon-etary poverty (Groups 1 and 2) and almost the 40% ofthem can be considered fuel poor. Households abovethe monetary poverty threshold that suffer from fuelpoverty form the 6% of the total. Finally, total fuel-poor households make up the 13% of all households.

Exploring the relation between key factorsOnce households were divided into six different groupsaccording to their position regarding income and energyexpenditure, their housing stock was characterized inorder to understand the relation between fuel poverty,monetary poverty and their shelter, given that this isthe third factor in the equation of fuel poverty.

First, the qualitative variables are taken into account:dwelling type, year of construction and heating avail-ability (Figure 7).

The analysis of the dwelling typewas conducted bydivid-ing the sample according to the variables: building blockand detached or semidetached house. Results show thatthe 88% of households in the Autonomous Region ofMadrid are located in apartment blocks. Nevertheless,this percentage is higher among groups identified as vul-nerable or in a situation of any kind of poverty.

The year of construction was considered an importantvariable as it reflects the thermal efficiency of dwell-ings. The first building efficiency regulations in Spainwere released in 1979 (Gobierno de Espana, 1979).This means that the majority of dwellings that aremore than 25 years old were built without any effi-ciency regulations. More than 80% of households inGroups 2 and 5 are located in old dwellings whileGroups 3 and 6 live in the newest housing stock.

In addition, the results show that roughly 91% ofhouseholds have some type of heating system, but thedistribution of heating availability is not uniformamongst all household groups. Almost 33% ofGroup 2 has no heating system, which represents the43% of all households without this facility.

Some quantitative variables considered relevant toenergy consumption in dwellings, as dwelling livingareas and the corresponding area per householdmember were also studied.

The living area per household revealed some differ-ences among groups as well, despite the fact themedian of all groups varies between 70 and 90 m2, asshown in Figure 8. Households in Groups 2 and 5live in the smallest houses while Groups 3 and 6enjoy the largest areas.

Figure 8 Living £oor area per household

Figure 9 Occupational patterns

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Given the existing differences among living areas ofgroups, the assessment of dwelling occupational pat-terns was considered necessary. To this end, thenumber of household members was analysed andthen the resulting living area per member determined.Figure 9 shows the analysis of the number ofmembers. As it can be seen, Groups 1, 3 and 4 aremainly formed by one or two people, while Groups2, 5 and 6 contain bigger families with a mediannumber of three members. The largest families can befound in Group 2. The living area per householdmember was then appraised and plotted in Figure 9.Members from Groups 2 and 5 live in the smallestareas with a median of 22 and 28 m2 per householdmember respectively. By contrast, Group 3 memberslive in the biggest area with a remarkable differencewith respect to the rest of the groups (40 m2 per house-hold member).

DiscussionThe evaluation of the incidence of fuel poverty bymeans of two methods shows different perspectiveson the problem, although both highlight a rising inci-dence of fuel poverty. The self-reported methodshows an increase in family arrears, while the incomeand expenditure approach reveals a rise in the percen-tage of the household budget spent on energy bills inrecent years. The results of the analysis show thatfuel poverty is a real and growing problem in thisregion. However, the availability of data related toreal expenditure instead of modelled expenditureunderestimates the number of households needing tospend more to obtain adequate temperatures.

The method implemented in this study would be suit-able for any other region if survey data are available.

The present research provides a broader vision of theposition of households with respect to monetary andfuel poverty thresholds. This permits the measurementof the incidence and the overlap of both types ofpoverty. The classification of households into sixgroups makes possible the distinction between themon the basis of their degree of vulnerability and/orthe assistance they may require. A first approach,derived from this classification, demonstrated thatGroup 6 could be classified as being in the best pos-ition, whereas Group 1 as the most in need.

In addition, the analysis of the housing stock character-istics brings in the third factor of fuel poverty providinga deeper insight on the complexity of households’ vul-nerability. Two groups stand out from the others(Groups 2 and 3) due to their extreme distinctivevalues in building age, heating availability and livingarea per household member. The characteristics oftheir dwellings make these groups representatives of

what could be considered the two faces of fuelpoverty: excessive energy expenditure and inadequateindoor temperatures.

Group 2 is formed by poor households, belowthe monetary poverty threshold, with low energyexpenditure. The housing stock is the oldest of allgroups, with the 83% of its housing built before thefirst Spanish efficiency regulations, therefore it is pre-sumed to be energy inefficient. Furthermore, the 43%of all households with no heating system are concen-trated in this group. Taking into account that Madridhas 2440 annual heating degree-days and 574 annualcooling degree-days (Instituto para la Diversificaciony Ahorro de la Energıa, 2010) it is reasonable tosuggest that these families do not experience adequatehousehold temperatures which poses importanthealth risks for these families (Dıaz et al., 2005;Simon, Lopez-Abente, Ballester, & Martınez, 2005).Hence, this group can be considered as fuel poor,through this deeper analysis is in contrast to thefirst approach described above. Although living indwellings with a median area similar to the othergroups, the resulting median area per member isone of the smallest amongst all groups at 22 m2 permember.

Group 3 consists of households located above the mon-etary poverty line but which suffer from fuel poverty,conceived as an excessive expenditure on energy billsaccording to the income and expenditure method.They live in the newest housing stock of all vulner-able-considered groups; more than the 40% of thesedwellings were built after first Spanish energy effi-ciency regulations were implemented. This groupholds the highest rate of heating availability of allgroups. The fact that its occupants enjoy the biggestarea per household member among all groups mayexplain their high expenditure on energy bills.

Group 1 has the deepest vulnerability due to theoverlap of both monetary and fuel poverty. Itshousing conditions show a mixture of variables thatconfirm the weakness of this group. Households inGroup 1 live in dwellings that were mainly builtbefore first energy efficiency regulations (Gobierno deEspana, 1979) thus they are expected to have a poorthermal performance. In addition, the area per house-hold member is bigger than Group 2, which increasesGroup 1’s energy needs. When combined with a highheating availability (almost the 84% of dwellings),this places the group to be above the 10% expenditurethreshold.

Groups 4 and 5, initially classified as vulnerable butnot below any poverty threshold, show little differencein their housing stock. Nonetheless, their dwellings,chiefly old, are not efficient enough to keep them outof fuel poverty. The current rising energy prices and

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decreasing salaries (due to present economic circum-stances) make these groups more likely to fall intofuel poverty in forthcoming years than Group 6. Thislast group is formed by households that have noincome shortfall and that are also located above thefuel poverty line.

ConclusionsThe results of the research have shown the existingrelationship between fuel and monetary poverty, inline with recent reports (Atanasiu, Kontonasiou, &Mariottin, 2014). In the Region of Madrid, almostthe 24% of the households suffer from some kind offuel poverty (either due to the high percentage oftheir incomes expended in energy bills or because ofthe inability to afford adequate warmth at home). Asfound in the study of the six population groups ident-ified, fuel poverty is a complex issue that can emergein different ways and from diverse household situ-ations. In order to face this problem there are threeurgent needs:

. To establish an official definition of the term ‘fuelpoverty’ that gathers all its complexity. To thisend, some groups from the Spanish Parliament(Grupo Parlamentario de la Izquierda Plural,2013) presented a legislative proposal claimingfor the recognition of the problem and the creationof a national plan against fuel poverty. Nonethe-less, it was rejected and there is still a need forthis specific, official and targeted definition.

. To develop more robust statistical data that allowa deeper knowledge of the problem. To date,general evaluation and comparison amongst Euro-pean countries has been made through the exploi-tation of the EU-SILC data. However, as shown inthis research, it does not provide accuracy forlower scale studies. Furthermore, it includesneither cooling needs nor the high temperaturesregistered within these dwellings, which representan important health risk in south Europeancountries (Robine et al., 2008). The EPF data rela-tive to actual expenditure of households make itdifficult to detect those families who cannotafford their energy bills and, consequently, havelow energy expenditure. Efforts should be madeto improve the understanding of housing energyperformance in order to estimate properly theexpenditure required by households.

. To implement specific policies aimed at house-holds detected as primary targets in this character-ization. Although some existing policies are nowbeing used to tackle fuel poverty, the presentstudy reveals shortfalls that need to be addressed.

The social energy tariff (Gobierno de Espana, 2009) isaimed at alleviating energy bill expenditure, but itcannot provide a long-term solution to fuel poverty.This is due to the current constant increase of energyprices, shown in Figures 1 and 3. Furthermore, aspointed out by the Buildings Performance InstituteEurope (Atanasiu et al., 2014), these measures do notgenerate added value or economic growth in the country.

By contrast, taking into account the antiquity of thehousing stock of the vulnerable population, energy ret-rofitting can be considered as the most suitablemeasure to provide a stable and long-term solution tofuel poverty. In fact, energy-efficiency measures specifi-cally launched for low-income households have provedto be successful practices in countries with an extendedexperience on tackling fuel poverty (Hamilton et al.,2014). These measures demonstrated the positiveimpacts on the reduction of household energy expendi-ture and on occupants’ health by improving indoortemperatures. Nonetheless, Spanish retrofitting pol-icies are not focused enough on the eradication offuel poverty. This is the case of the ‘State Plan for Pro-motion of Rented Housing, Building Rehabilitationand Urban Renewal and Regeneration 2013–2016’(Gobierno de Espana, 2013c). In this plan the low-income households are taken into account in order toprioritize the interventions, but they are not its maintarget. Aid is targeted at dwellings built before 1981and, as detected in Group 3, there are fuel-poorfamilies living in dwellings built after that year withexcessively high energy bills. Thus, this regulationwould not respond to this population needs andwould be leaving behind important opportunities ofenergy saving. Furthermore, subsidies cover up to the35% of the intervention costs, which make the refurb-ishment likely to be unaffordable for the lowest incomehouseholds, Groups 1 and 2. Financial aid derivedfrom PAREER Scheme (Gobierno de Espana, 2013e,2013f) poses similar barriers since a guarantor of the20% of the total costs of the refurbishing costs isrequired. In addition, all mentioned policies shouldclearly stimulate the implementation of passive strat-egies in order to improve indoor thermal conditionsin these households. Finally, the recent improvementsin energy certification of buildings (Gobierno deEspana, 2013d) can provide a positive boost forenergy retrofits of dwellings. Nonetheless, energy per-formance certification may become create a revengeeffect for low-income families. Energy labelling couldraise the prices of the most efficient houses, whichwould displace the low-income population to thosehouses with the lowest energy rating.

Fuel poverty has an important and increasing presencein the Region of Madrid given that current policies donot guarantee the accomplishment of minimumrequirements. Specific policies are needed so that fuelpoverty can be eradicated in all Spanish territory.

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AcknowledgmentsThe authors would like to thank Dolores Redondasfrom the Department of Applied Mathematics, E.U.Arquitectura Tecnica, Universidad Politecnica deMadrid, for reviewing the statistics and for usefuladvice. The authors also thank Jamie Benyei forreviewing this paper. Finally, the authors thank thereviewers and journal editor for their thorough revi-sion and valuable comments made.

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