Is Spain's Energy Voucher Lighting the Way for the Poor? A Microeconomic Evaluation of the Bono Social Eléctrico

Energy poverty refers to the inability of households to afford adequate energy services, connected to negative impacts on health, well-being, and economic opportunities. It is a social policy issue that exacerbates inequality and limits access to essential services, particularly among vulnerable populations. In Spain, energy poverty has become an increasing concern, with many low-income households struggling to meet their energy needs despite various social protection mechanisms. This paper analyses the effectiveness of the Bono Social Eléctrico (BSE), a Spanish social electricity voucher aimed at alleviating energy poverty among vulnerable households. Departing from a microeconomic theoretical framework and a applying a Stochastic Frontier Analysis (SFA) approach, the study evaluates the gap between observed and potential energy poverty levels. The empirical analysis employs Spanish household panel data from 2021 to 2023, capturing key household characteristics and subsidy information. The findings indicate that, while the BSE contributes to reducing energy poverty, its effectiveness is constrained by insufficient coverage and lack of impact on the poorest households. Moreover, energy poverty has worsened over the years and there has been a decline in the mitigating effect of the BSE, while some regional disparities persist. Education and computer access play an important role in addressing energy poverty. The study suggests policy recommendations to enhance the voucher’s targeting mechanisms and explores strategies for more effective interventions to tackle energy poverty.