Paradise for Solar Energy

Why Spain is now a solar energy paradise

A few years ago, anyone wanting to install solar panels on a Spanish roof invariably encountered a wall of disbelief and warnings. Terms like Impuesto al Sol (the solar tax) were thrown at you left and right. The result? Many roofs remained empty, despite the abundance of sunshine hours.

The notorious solar tax has been definitively consigned to the history books. Although bureaucracy in Spain still requires patience, the legal barriers to self-consumption have disappeared. As a result, Spain is now (thanks to the enormous number of sunshine hours) simply one of the most profitable places in Europe to invest in solar energy.

In this blog, we explain what has changed and why you no longer need to worry about the laws of the past.

What was the Solar Tax again?

In 2015, the then-Spanish government introduced a law requiring solar panel owners to pay tax on the electricity they generated and consumed themselves. It was a unique construct that met with much criticism worldwide.

The goal at the time was to protect the revenues of the major energy companies. Although the law was often not even enforced in practice for small households, it caused a huge wave of uncertainty. People thought: “Why would I invest if the sun is going to be taxed?”

The major turnaround

In October 2018, the decisive word arrived: the Spanish government officially abolished the solar tax via Royal Decree Real Decreto-ley 15/2018.

Since then, much has improved:

  • Right to self-consumption:
    The law now recognizes the right of every citizen to produce and consume solar energy themselves without extra costs or taxes.
  • Compensation for surplus:
    Since 2019, you can have your bill reduced via Compensación de Excedentes for the electricity you feed back into the grid.
  • Shared installations:
    It is now possible to share solar panels with neighbors (for example, in an apartment complex or homeowners’ association), something that was previously unthinkable.

Why Spain is now the best place for solar panels

Now that legal barriers have disappeared, Spain’s natural advantages are truly coming into their own.

  • 3,000 hours of sunshine per year:
    In large parts of Spain, the sun shines for an average of 300 days a year. By comparison, in Northern Europe, this is often less than half that. This means that your panels in Spain yield significantly more return per square meter.
  • The rise of the ‘Virtual Battery’:
    For a few years now, many Spanish energy suppliers have been offering a Virtual Battery. This allows you to “store” the surplus electricity generated  but not used yourself (for example in summer) and therefor sent back to the grid as a credit in euros, to reduce your bill to €0 (for example duringthe shorter winter months) or usd to reduce the bills of a second home.
  • Subsidies en tax benefits
    The Spanish government and the EU are massively encouraging the transition. Depending on your municipality and resident status, you can benefit from:

      • IBI-discount: A reduction in your property tax that can amount to up to 50% over several years.
      • IRPF-deductions: A deduction on your tax return up to 60%.
      • Subsidies: reimbursements on installation costs.

Conclusion: No fear, but action

The “Solar Tax” is a ghost of the past. Spain has completely changed course and is now a frontrunner in the green revolution. The combination of the enormous amount of sunlight and feed-in tariffs ensures that the payback period for solar panels in Spain is short: often just between 5 and 6 years.

So don’t let stories from ten years ago hold you back. The sun is free, and in Spain, you can finally benefit from it without limits.

Curious how much you can save on your Spanish energy bill?

Contact us for a no-obligation roof scan and a customized quote!