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AbstractUnderstanding how energy use evolves at different stages of development is essential for reliable prospective analysis and planning. With that aim in mind, this paper examines the composition of residential energy consumption and its sensitivity to income changes, distinguishing fuel types and accounting for complete heterogeneity of the income coefficient. The focus on domestic energy use allows for the examination of fuel transition under the conceptual framework of the energy ladder and energy portfolio hypotheses, showing the increasing need for modern fuels in the household sector. The results indicate a nonlinear relationship between income and domestic energy consumption that can be attributed to two factors. First, along the income distribution, consumption of modern fuels increases, replacing traditional and transitional fuels until modern fuels drive all of the growth in domestic energy demand. Second, at th...