Farewell To Spain’s Solar Tax

The Spanish Cabinet has approved a royal decree, which introduces a package of urgent measures to boost the country’s energy transition. It includes the already announced elimination of the “sun tax”, and other important measures, such as compliance with renewable energy objectives, electric vehicle adoption, reduced electricity prices, a social bonus for heating, consumer protection measures, and the extension of an electric social bond.

Spain's new Minister of the Ecological Transition, Teresa Ribera.

Image: Ministry of Ecological Transition

Through the new royal decree, approved by Spain’s Council of Ministers today, the Ministry for the Ecological Transition, directed by Teresa Ribera, has put an end to the so-called “sun tax”, which the Mariano Rajoy Government approved, also by royal decree, in October 2015. The announcement for the scrapping of the notorious tax was already made by Ribera in June.

The main focus of the decree is the introduction of a regulation to support self-consumption across the country. The new rules include: simplified procedures for registering new power generators, not exceeding 100 kW in size, under self-consumption; the right to self-consume energy for community renewable energy projects (according to the Minister, 65% of Spaniards live in a co-operative regime, which will allow them to take advantage of economies of scale); and the removal of all charges for self-consumed power.

The Institute for the Diversification and Saving of Energy (IDEA) says the installed power currently registered under self-consumption in Spain amounts to 1,196 MW, of which 170 MW correspond to renewable energy installations. Greenpeace also released a study this week, in which it is calculated that the promotion of self-consumption could save €1,770 million for Spanish energy consumers.

The government intends to make the transition to a clean and accessible energy model easier by eliminating a series of regulatory barriers, which have both “hindered and discouraged” the introduction of electricity self-consumption in Spain.

Other measures have also been approved, including:

1. The extension of a social-electric discount rate (bono social eléctrico): The new rules will prohibit the cutting of supply in households receiving the discount rate, and where at least one child under 16 lives; and it extends to single-parent families.

2. A discount rate for heating: Direct economic aid so vulnerable households can pay their heating, hot water and/or kitchen expenses this winter, regardless of the fuel they use.

3. Protectionist measures for consumers to optimize the contracting of electricity supply: Among other aspects, changes are contemplated in the power contracting steps, the data marketers can access, and the way they can offer services.

4. The fulfillment of renewable energy targets: A one-off extension until March 31, 2020, has been granted for access and connection permits, which were awarded to developers prior to the approval of Law 24/2013, and in the absence of which, would expire on December 31, 2018. This avoids the submission of new applications for the nearly 9,000 MW of power awarded during last year’s wind and solar auction.

5. Wider electric vehicle adoption: The presence of public recharging points will be expanded.

6. Moderation of electricity prices, for which two temporary measures have been adopted: (i) the suspension of the 7% tax on electricity generation; and (ii) the exemption on the Special Hydrocarbons Tax (according to the Ministry, the impact of these measures on the electricity bills will be around 4%).