interventions promoting cleaner and more efficient energy use. A robust approach to measuring energy poverty enables policymakers to pinpoint those most in need and track progress over time.

# **Furthermore, energy poverty has multiple drivers, including low income, poor energy efficiency, and**

**high energy prices** . As explored further in section 2, energy poverty manifests in various forms, including a lack of energy access due to power shortages or the inability to adequately heat one's home. Thomson et al. (2017) define energy poverty as inadequate access to home energy services, encompassing heating, cooling, lighting, and appliance use. The Energy Poverty Advisory Hub (EPAH)<sup>14</sup> (2022) categorizes the drivers of energy poverty into contextual and individual factors, identifying low income, low energy efficiency, and high energy prices as overarching causes. The consequences of energy poverty on human welfare can be severe in both the short and long term (ibid). Specific population groups may experience varying impacts based on socio-demographic characteristics, household composition, health, energy literacy, and cultural factors.

**This paper systematically reviews existing literature on energy poverty measurement, assesses the suitability of potential measures for Bulgaria, and constructs feasible measures based on the availability and quality of existing micro datasets.** This involves analyzing measures previously established in academic literature, white papers, and policy reports, focusing on the EU context. Then, utilizing available household-level microdata, we analyze the feasibility of implementing these indicators in Bulgaria. The examination involves several indicators using household expenditure data from the Household Budget Surveys and income and housing conditions from the European Living Condition Survey (EU-SILC). When selecting appropriate indicators, Palma and Gouveira (2022) recommend considering three key factors—context, scale, and availability.  Additionally, we experiment with the potential use of big data, including satellite data. Subsequently, we compare these measures, highlighting their respective strengths and limitations. The main objective is to inform the Bulgarian government's efforts in measuring, operationalizing, and addressing energy poverty.

# **Additionally, the paper examines the correlation between energy poverty and income poverty,**<sup>**15**</sup>

**considering its policy implications.** Our analysis involves characterizing energy poverty and identifying overlaps with monetary poverty to understand potential intersections between these vulnerable groups. Recognizing these overlaps is crucial for designing effective instruments to mitigate energy poverty. This includes measures to protect the energy poor and vulnerable populations in the face of rising energy prices or other forward-looking policy interventions addressing energy inefficiencies.

# **Our results suggest substantial variations in the incidence rates of energy poverty depending on the**

**chosen definition.** Notably, the so-called 10 percent threshold, which defines the energy poor population as all those reporting an energy expenditure share in household income or expenditure of more than 10 percent, exhibits a significant deviation from other expenditure-based indicators, resulting in an incidence rate of approximately five times higher. This deviation could be attributed to measurement issues, and considerable criticism can be found in the existing literature on this indicator. Although this criticism is valid, the 10 percent measure is one of the few monetary measures of energy poverty that allow for comparisons across countries and over time. The remaining monetary-based measures show fluctuations ranging from 7.9 to 9.9 percent. Consensual measures, which rely on self-

> 14 EPAH is a leading EU initiative aiming to eradicate energy poverty and accelerate the just energy transition of European local governments, which replace the previous EU Energy Poverty Observatory.

> 15 Following the European Union standard, official poverty is measured by using relative-income poverty lines in Bulgaria. The at-risk- of -poverty rate (AROP) is the share of people living below the national poverty line, set at 60 percent of the equivalized median disposable income after social transfers. This is different from other uppermiddle-income countries outside the EU, which use absolute measures to track monetary poverty.

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