Spanish government rethinks tax on small-scale solar power producers

Spain’s Industry Ministry says it will lower the charges it intends to impose on individuals who install solar panels to generate electricity for their own use. Those with installations producing up to 10 kilowatts will be exempt from a tax on electricity generated outside the national grid, although they will still be liable to pay a toll to cover maintenance of the system and other costs faced by Spain’s electricity companies.

The modification, which has been introduced to the latest version of legislation covering the use of renewable energies that is due to be approved in September, will only affect the production of solar power for residences and small offices or stores. Larger companies looking to make savings from self-generation using bigger installations will continue to have to pay both taxes.

Larger companies looking to make savings from self-generation will continue to have to pay both taxes

The move is a response to widespread opposition to the legislation’s so-called “support toll,” or tax on domestic and business producers of solar and wind energy who want to supply the national grid with their surplus electricity. The first draft of the proposals was made public a year ago and either effectively put an end to many people’s plans to install solar panels or prompted them to do so without officially registering them.

The Industry Ministry says ending the planned tax on domestic producers of solar energy “is a tax break that other consumers will have to pay for,” because self-generators do not pay the sales tax and other levies on the energy they generate, and because “they are benefiting from the national grid as a back up, even if they do not consume energy from it,” noted Industry Minister José Manuel Soria.

The latest amendments to the draft proposals will also reduce the paperwork needed to install solar panels, particularly the required viability study for connecting to the national grid, which can cost up to €1,000, when there is a device that prevents surplus energy from being fed into the national grid. Self-generators who meet the required criteria will also be able to benefit from discount rates for low income households that contract under three kilowatts of power.

At the same time, exemptions and discounts on the self-generation tax will be available in the Canary Islands, the Balearics, and the Moroccan enclaves of Ceuta and Melillas, regardless of how much generating capacity is installed.