Household energy bills globally have come down from the peaks seen during the global energy crisis in 2022, but on average they were still around 4% higher in real terms in 2024 than they were in 2019. Household energy bills soared in many parts of the world as a result of the Covid-19 pandemic and Russia’s full-scale invasion of Ukraine in 2022, which introduced a period of extreme volatility and a sharp run-up in prices. At the peak of the crisis in 2022, bills rose 16% year-on-year. This fuelled inflationary pressures and pushed energy affordability to the top of the political agenda. For most households around the world, energy is the third-largest expense after food and housing.

Household bills are sensitive to movements in underlying fuel prices; oil price pressures eased in 2025, but natural gas markets remained relatively tight in many parts of the world. Benchmark oil prices were around USD 15/barrel lower at the end of the year than at the start, reflecting a large global supply surplus and bringing gasoline prices back to pre-crisis levels. Meanwhile, relatively slow growth in supply kept natural gas import prices elevated in the first six months of 2025, before coming down as new LNG export projects began operating; residential natural gas prices in Europe and Japan were on a downward trend in 2025, but they remain around 10-30% above pre-crisis levels in real terms. North America, by contrast, saw residential natural gas prices rise by around 5% in 2025, though they remain well below prices in Europe and other importing regions.

The prices paid by households for energy vary widely from country-to-country, reflecting not just the cost of supply but also various additional levies, taxes and subsidies. For gasoline, taxes can account for as much as 70% of the final price charged to consumers, as is the case in some countries in Europe. It can also be subsidised and delivered at prices below market value, as in many parts of the Middle East. Electricity is generally subject to less tax compared to oil, but the range is equally wide, with different types of taxes, fees, levies and surcharges amounting to as much as 50% of electricity bills in some countries, or as low as zero in others. On average, the electricity system cost, i.e. the actual cost of producing and transporting the energy to consumers, makes up around 75% of the cost of electricity for households.

Electricity is an increasingly important part of household energy spending; its share in residential energy use around the world has risen from less than 20% in 2000 to 30% today. In advanced economies, it has reached 40%. This is driven by growing appliance ownership and the electrification of end uses through the purchase of electric vehicles or heat pumps, which pushes down spending on oil and natural gas. With residential electricity consumption per household currently growing at around 2% a year (while oil and natural gas use is stagnant or declining), total household spending on electricity topped USD 1 trillion for the first time in 2024.

The size and composition of electricity tariffs depend in large part on policy and market design. Household electricity prices are typically made up of three main components: energy supply costs; network charges; and taxes and levies (minus any applicable subsidies such as social tariffs or targeted support). All of these costs are shaped by a complex mix of available resources, market design, infrastructure investment, and policy and regulatory choices. Renewables tend to have a dampening effect on wholesale power prices because of their low marginal cost. However, their upfront capital costs need to be covered, and variable sources such as wind and solar may incur additional balancing costs. Network charges, for grids and storage, are becoming an increasingly significant part of many household electricity bills. Electricity is often taxed at a higher rate than natural gas for residential use, on an energy equivalent basis.

More than 120 million households in advanced economies spend more than 10% of their income on residential heating, cooling and appliances. Adding the spending on private transportation pushes up the total share of income spent by the poorest households on energy to over 20%. For these households, energy spending can compete directly with other essential expenditures like food. Disparities in energy affordability across different parts of society are driven not only by income but also by the efficiency of housing and appliances. In many countries lower-income groups tend to live in less energy-efficient homes and are unable to pay for energy retrofits. This exacerbates the energy affordability gap between low- and high-income groups.

Energy affordability – including the huge unresolved issue of access to electricity and clean cooking – is a major obstacle to social and economic advancement in emerging and developing economies. Some 730 million people worldwide do not have access to electricity today, eight out of ten of whom live in sub-Saharan Africa. Around 2 billion people lack access to clean cooking solutions, with women and children suffering the worst impacts on their health and spending a large part of each day collecting firewood and other biomass.

Closing the access gap will require close attention to affordability constraints. In sub-Saharan Africa, the IEA estimates that 40% of the population without electricity are unlikely to be able to afford a basic level of electricity provision. Nearly 60% of households without access to clean cooking would need to spend over 10% of their income to cover the upfront costs. In many cases, considerations of affordability mean that even some households that have access to clean cooking options continue to use traditional fuels.

Lower energy efficiency levels of homes and appliances in many emerging and developing economies put additional strains on energy bills. High efficiency air conditioners and other appliances have greatly reduced running costs and are not necessarily more expensive to buy but are not always easy for consumers to access or identify.

Exposure to the cold is the current leading cause of temperature-related mortality around the world, estimated at 4.5 million deaths each year. Households that cannot afford to keep their home sufficiently warm are at a higher risk, and generally have higher medical bills, mainly due to respiratory issues. The societal costs associated with excessive cold in homes outweigh the investment required to make building improvements: for example, research in a number of advanced economies suggests that every USD 1 spent on building improvements can generate as much as USD 2.5 in societal health-related cost savings, but this requires an integrated approach across departments.

A lack of access to affordable cooling is leading to heat-related mortality in many countries. This is becoming more prevalent with rising temperatures: the World Health Organization highlights evidence that the exposure of vulnerable populations to dangerous levels of heat has increased fourfold over the last twenty years. Access to cooling technologies such as air conditioners and fans can reduce risks of heat-related health issues. However, cooling is not affordable to all, with air conditioner ownership, for example, being concentrated in higher-income groups. As 2025 IEA analysis on The Future of Electricity in the Middle East and North Africa shows, a continued focus on energy efficiency will be critical in ensuring affordable access to cooling and managing electricity demand growth.

The IEA has tracked over 120 new or updated demand-side policies across 45 countries – together accounting for about half of global energy demand – that have the explicit intent to improve household energy affordability in 2025. Most policies focused on improving energy affordability in people’s homes through energy retrofitting and promoting more efficient appliances, or improving access to affordable personal transportation, such as electric scooters and motorcycles.

However, just one-third of all tracked demand-side energy affordability policies in 2025 specifically targeted the households that need support most. Untargeted policies don’t always ensure that the support benefits those who need it the most. For example, even though lower-income households often live in homes with lower energy performance, less than half of all public spending on retrofits and other building incentives are expressly targeted at these homes. Targeted policies are often more effective in addressing energy poverty issues than non-targeted measures. It was found that where policies were targeted, income thresholds were most frequently used to separate population groups.

Effectively enhancing energy affordability starts with identifying and targeting the households most at risk. Placing affordability at the centre of energy policy can improve people's lives and deliver benefits across wider policy goals. Governments can consider both demand- and supply-side policies to enhance energy affordability, combining regulation and incentives to permanently lower people’s energy bills. The IEA will continue to support governments in tracking energy affordability using various indicators, analysing policy trends and sharing best-practice examples from countries across the world.