Spain Abolishes the ‘Tax on the Sun’

Notorious law repealed as electricity costs soar.

Spanish lawmakers this month canceled Spain’s notorious “tax on the sun” as part of a package of measures aimed at bringing down soaring electricity costs.

The package was issued on October 5 as a royal decree law (RDL), a legal maneuver allowing the administration to rush emergency regulations into place and then debate them afterwards.

On October 18, Spain’s Congress of Deputies voted to admit the RDL 15/2018, with the Spanish People’s Party (Partido Popular, or PP in Spanish), which brought in the tax on the sun in October 2015, abstaining from the vote.

As part of the legal process, there will now be a lengthy consultation period on the law. However, if parties cannot reach agreement on amendments, as seems likely to be the case, then RDL 15/2018 will stay as it is.

The law includes a six-month halt on two types of power generation tax, which could help cut electricity bills by 4 percent, and an extension of household eligibility for a government-sponsored energy discount called the social bonus (“bono social” in Spanish).

But the highlight of the decree was the relaxation of rules on renewable energy self-consumption, which has been held back for the last three years in Spain as a result of legislation muscled in by the PP at a time when it held a parliamentary majority.

The tax on the sun, as Spain’s royal decree (RD) 900/2015 was commonly known, was actually a complex set of tolls and charges applied to grid-connected behind-the-meter distributed generation and storage assets, ostensibly to prevent renewables from overloading the grid.

In practice, the PP-led government never fully explained how charges would be collected under the tax. It never had to.

The fear, uncertainty and doubt around the tax largely halted installations, and only around 1,200 plants were ever listed on the government’s solar self-consumption registry.

The irony is that even if the PP government had worked out how to collect the tax on the sun, most Spanish households could have installed solar panels without paying it.

RD 900/2015 only applied to systems of 10 kilowatts or above, which is more than twice the average power rating of the average Spanish home.

The main problem for homeowners wanting to press ahead under the sun tax regime was not the hypothetical threat of charges but the law’s very serious administrative requirements.

“We never paid a cent of the tax on the sun, but the administrative burden was massive, which increased the cost of installations,” said Daniel Pérez, chief legal officer at Holaluz, an independent green energy retailer.

He had one member of his 10-person team working full-time just on meeting the RD 900/2015 paperwork requirements for a trickle of residential PV system applications, he said. Now that trickle will likely turn into a flood.

Solar costs have fallen significantly in the last three years, while Spanish consumers now face the highest electricity prices in a decade.

The average cost of energy on Spain’s electricity market has risen 45 percent in the last year, to €71.30 (USD $81.75) per megawatt-hour, financial daily Expansión reported this month.

The cost is not far off the highest ever recorded in the Spanish electricity market, in January 2006, when energy prices topped €73.14 ($83.82) per megawatt-hour.

Soaring energy pool prices meant the average Spanish consumer paid €74.66 ($85.60) for their electricity in September, Expansión said.

“All we’ve done is go back to the starting point. It’s not like this is an incentive. You don’t get anything [for installing solar], but at least they don’t take anything away,” said Pérez.

Source: greentechmedia