The Energy Burden Problem

Written by: Trinity Kinslow & Daniel Baker
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“Energy Burden,” as defined by the American Council for an Energy Efficient Economy [ACEEE], is the percentage of gross household income spent on energy costs. On average, households spend 3% of their income on energy costs. Households that spend upwards of 6% of their gross income on energy are considered to have a high energy burden. 

According to a 2020 ACEEE Report, two out of five low-income households have severe energy burdens, spending more than 10% of income on energy costs -- typically as much as 13.9% of their annual income, as documented by the U.S. Department of Energy [DOE]. In fact, the ACEEE found that 30 million households experienced high energy burdens before the pandemic.

Black, non-White Hispanic, and Native American households spend far more on energy compared to White households. These burdens stem from systemic inequality and underfunding of these communities.

Since the beginning of the COVID-19 pandemic, energy burdens for low-income communities have worsened, as this Nature Energy article detailed. An increasing number of households are rife with inefficient, older appliances, high-energy lighting, and ineffective insulation. Poor building conditions result in respiratory problems and high stress. High to severe energy burdens force tough decisions between paying energy bills or buying necessities. 

The DOE’s Office of Energy Efficiency & Renewable Energy released a report stating that: “Cost-effective efficiency improvements, such as insulation and more efficient lighting and appliances, in low-income households can reduce electricity consumption by 13% to 31%.” 

Reducing energy costs, which is one of the top priorities for households, creates money for other critical needs. The same goes for the business community where margins can be very thin. Saving money on energy costs could be the difference between keeping doors open for customers and shutting down. However, too many households and businesses have been locked out of energy upgrade opportunities due to a number of barriers and inequities in the energy efficiency sector.

High energy burdens can be addressed through increased funding for programs such as the Weatherization Assistance Program which “reduces energy costs for low-income households by increasing the energy efficiency of their homes, while ensuring their health and safety,” as well as the Low-Income Home Energy Assistance Program which provides federal funds to “managing costs associated with home energy bills, energy crises, weatherization and energy-related minor home repairs.”

State and local governments, utilities, and organizations should also seek to instill more inclusive financing programs -- a topic we’ll cover in future blog posts. These adjustments would allow more families and businesses to afford energy efficient upgrades, reducing energy costs as well as their energy burden.

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Gemini Energy Solutions is striving to increase education, awareness, and access to affordable energy efficiency upgrades in historically disadvantaged communities. Gemini Energy Solutions specializes in energy efficiency improvements for the small commercial building sector -- buildings 25,000 square feet or less. Learn more about our innovative, affordable energy audit system and begin lowering your energy costs today!