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Abolition of 'sun tax' seen boosting small-scale solar installations in Spain

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Abolition of 'sun tax' seen boosting small-scale solar installations in Spain

The Spanish government's introduction of emergency measures to speed up its energy transition and reduce power prices is expected to boost small-scale solar installations for self-consumption in the country.

A royal decree announced by Spain's Ministry for the Ecological Transition on Oct. 5 simplifies procedures for registering new power sources under 100 kW for self-consumption, allows community projects to install their own power generators and removes charges for self-consumed electricity. The decree, a temporary measure that will have to be ratified by the Legislature, also includes a six-month suspension of a 7% tax on power generation.

Spanish energy minister Teresa Ribera had previously said that the government intended to scrap the self-consumption charges, known as the "sun tax." A new socialist government that replaced former center-right prime minister Mariano Rajoy's administration in June has been markedly more renewables-friendly than its predecessor.

Before introducing the sun tax and other measures that depressed renewables growth in the country in 2015, Spain infamously introduced retroactive cuts to its feed-in tariff for solar PV in 2010. The country is still embroiled in ongoing legal battles over the move.

The country's solar trade body hailed the Oct. 5 decree for removing "economic and administrative barriers that were established artificially and unfairly."

Spanish solar association UNEF applauded the measures on Oct. 9, saying in a news release that the complexity of administrative procedures had been the biggest obstacle slowing down the development of residential and commercial solar installations for self-consumption.

"UNEF values positively the turn taken in our country's self-consumption policy. We finally see a legal framework that will allow its optimal development," the association said in the release. "UNEF has defended for seven years a self-consumption regulation free of administrative or technical barriers so consumers and society can enjoy the social, environmental and economic benefits self-consumption brings."

The reforms also include a deadline extension for renewable energy developers to secure construction licenses, which the government said was necessary to ensure timely construction of 9 GW in renewable projects awarded through auctions. Currently, only 100 MW have been installed.

Solar developer Sun Investment Group said investors and developers would increasingly turn to Spain as a result of the policy package.

"It is extremely positive to see Spain joining Poland and other countries in Europe in taking the right steps to move towards renewable energy," its CEO, Deividas Varabauskas, said in a statement. "SIG is also assessing Spain as a potential market, so we are very interested in seeing how their positive shift towards renewable energy goes. We already have experience in Spain in structuring and developing a solar PV project portfolio for 40 MW with [a] local PPA utility company, so we are eager to start new projects in this market."

A majority of the 135 MW of solar capacity installed in Spain last year were grid-connected PV systems for self-consumption and stand-alone systems for agricultural use, according to industry publication PV Magazine.

Household retail prices are set to decrease by 4% as a result of the 7% generation tax suspension, Ribera said, according to energy news website Montel. "This is just a temporary reprieve while we work on other structural market measures," the site quoted Ribera saying.