Energy cost is defined as the amount of household expenditures spent on electricity, gas (utility and bottled), and other fuels (including fuel oil, wood, etc.). LEAD does not include transportation costs when developing energy cost metrics; however both these metrics can be examined in the Household Energy and Transportation Burden layer on the State and Local Planning for Energy (SLOPE) platform.

Energy burden is defined as the percentage of gross household income spent on energy costs. It is calculated by dividing the average housing energy cost by the average annual household income. A household with 6% or greater energy burden is considered to be a high energy burden household. 

According to data on the LEAD tool, the national average energy burden for low-income households is 6% (i.e. an AMI of 0-80% as defined by the U.S. Department of Housing and Urban Development), which is three times higher than that for non-low-income households, which is estimated at 2%. In some areas, depending on location and income, energy burden can be higher than 30%. Per the data available from the U.S Census Bureau’s American Community Survey (ACS) data, 42% of U.S. households, or about 51 million, are identified as low-income.

There are a number of different factors that could increase energy burden for households. Examples include higher-cost fuels, such as propane or other bottled fuels, and energy-inefficient homes. Energy-inefficiency can in part be due to a lack of insulation in older homes and older appliances. For households that face these challenges, there is a greater potential for quick energy and cost savings solutions. However, communities with low-income households face barriers to accessing energy technologies that can help make energy more affordable, like installing solar photovoltaic (PV) panels.  In 2022, per a Lawrence Berkeley National Laboratory (LBNL) report, approximately 45% of solar PV adopters were categorized as “low-and-moderate income”, while only 23% were categorized as “low-income."

There are factors that can prevent low-income households from accessing energy technologies, including a lack of qualifying credit and the inability to finance upgrades. LEAD Tool data estimates that 52% of low-income households are renters—not owners—of their homes. This percentage of renters further compounds the issue into a split incentive—landlords may not be motivated to pay for energy improvements, leaving potential energy bill savings out of reach for the low-income tenants.

Energy efficiency and weatherization measures not only help to lower energy bills for low-income households, but also improve indoor air quality, safety, and comfort, thereby positively impacting human health. When hiring locally, these projects also help to shore up neighborhood housing stock and create local jobs where they are often needed.

It is important to note that there are several different scales used to identify low- and moderate-income households in the United States. These scales have been used in the past determine who is eligible for various federal- and state-funded programs and are adjusted every year due to inflation. Further, there is no direct relationship between these scales and there is no “one-size-fits-all” approach to poverty because different states and cities across the United States have varying costs of living.

A census tract that meets the threshold for: 1) environmental, climate, or other burdens, and 2) an associated socio-economic burden is marked as disadvantaged as defined by the Climate and Economic Justice Screening Tool (CJEST).