Energy Poverty and Its Effect on Economic Growth in Türkiye
Authors: Algül Yahya 
Published: December 2024

The energy poverty of households presents one of the significant threats to sustainable development worldwide. Governments, international organizations like the United Nations, and various non-governmental organizations have enacted policy measures to mitigate energy poverty and its negative impacts on society. This concern is exacerbated by the finite nature of fossil fuel resources globally and persistent instabilities such as the Russia-Ukraine conflict, the Iran-Israel conflict, and the COVID-19 pandemic, which contribute to price fluctuations and energy supply insecurity. Consequently, the issue of energy poverty may become increasingly intricate and prominent in the near future. Due to its importance, the issue of energy poverty has been widely investigated in the literature. A new dimension in the literature is based on the relationship between energy poverty, which is defined as the inability to access a sufficient volume of clean energy, and economic growth. Energy poverty can affect the economy through lower productivity and lower labor force participation. In this regard, the majority of studies in the literature have focused on African countries with low electricity access rates, typically using energy access rates as a proxy for energy poverty. In those studies, "energy poverty" and "energy deprivation" are often used interchangeably. However, this approach is not appropriate, as energy poverty and energy deprivation due to low energy access rates imply different conditions. While energy access rate can serve as a measure of energy poverty, relying solely on this indicator may not always accurately reflect the extent of energy poverty. This is because households with full infrastructure and access to clean and continuous energy sources may not always be able to fully utilize these sources, owing to cost constraints, income deficiencies, or other factors. A striking example of this situation can be seen in Türkiye, where 20.3% of households face difficulties in adequately heating their homes, representing one of the highest rates in Europe. Additionally, the average per capita household energy consumption in Europe was 1.7 MWh in 2021, whereas in Türkiye, it was only 0.56 MWh on average, which is one-third of the EU average. This happens despite Türkiye having relatively low energy prices, various support programs in place, and nearly 100% electricity access and very high natural gas access rates. Hence, unlike other studies that use energy access rate, this study utilizes per capita household electricity consumption as an indicator of energy poverty, which could provide a more precise evaluation, especially for Türkiye. This introduces a novel viewpoint in the research on energy poverty and economic growth. For this reason this study examines data from 2007 to 2021 comprising 15 years of annual data with DOLS and FMOLS panel econometric techniques across 26 regions of Türkiye, to uncover the association between energy poverty and economic growth. Additionally, factors such as the consumer price index, population, and industrial electricity demand per capita for production are used as control variable. According to both of the estimation techniques an increase in household electricity consumption may also lead to an increase in per capita GDP in Türkiye.