Unraveling the Complexities of Energy Poverty in Germany- A Comparative Analysis of Determinants, Dynamics, and Indicators

Abstract

This master thesis investigates the determinants and dynamics of energy poverty in Germany based on different calculation methods. Using a dynamic random-effects probit model, socioeconomic factors associated with a household’s risk of experiencing energy poverty are identified. Factors such as household composition, employment status, and living space are found to be strongly correlated with the prevalence of energy poverty. Significant state dependence highlights the persistence of energy poverty, whereby households that have experienced energy poverty in the past are at higher risk of remaining energy poor in the future. In a further step, the dynamics of energy poverty are investigated by means of survival analysis. This analysis reveals that both transitory and persistent aspects of energy poverty exist. A decreasing trend in the conditional probability of exiting energy poverty illustrates the transitory element, while the significant proportion of households unable to exit energy poverty throughout the observation period as well as statistically significant state dependence indicate the persistence of the issue. This study is based on the capability approach and emphasizes that addressing energy poverty should be done not only by increasing income, but also by improving individuals’ capabilities to achieve well-being. The conclusions drawn from this study serve as a basis for informed policy decisions and enable the development of targeted policies to address and alleviate energy poverty.