Spain Explained

The rise and fall of solar energy in Spain

Last updated on May 18th, 2020 at 05:59 pm.

You’d think with the seemingly endless sunshine in Spain that solar power would be its chief form of energy. However, this is not the case. Why doesn’t Spain invest more heavily in solar power?

Spain has a reputation for the number of sunny days that it can boast. Even in the winter it rarely rains and even cloudy days are few and far between. For those living in more northerly climes then it can be a little bewildering to see that solar power in Spain appears to be underused and traditional energy sources continue to power homes and offices.

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The background of solar energy in Spain

Early in the decade Spain encouraged the use of solar power and the development generally of renewable energy with subsidies aimed at encouraging investment. Renewable energy doubled between 2006 and 2012 and subsidies reached €8.1 billion by 2012.

However, this level of support was unsustainable and those who had invested suddenly found enthusiasm for their chosen form of energy draining away. This was considered to be a real pity by environmentalists and those who had invested considerable sums of money in its development. In 2012 a 7% tax was introduced on all electricity sales in Spain, both conventional and renewable, and there was a gradual reduction in subsidies and incentives.

Spain had emerged in 2010 as the world leader in concentrated solar power but soon saw other countries catching up and overtaking them.

Sun tax

Since then the situation has in fact got worse for those relying on solar energy in Spain. In 2015 the Spanish government approved a new national law on self-consumption of energy that taxes solar installations, often called the sun tax. This includes self-consumption installations that just produce for their own use and don’t feed into the grid. Solar energy consumers must now pay the same grid fees as all electricity consumers in Spain pay.

Those with PV (Photovoltaic) systems over 10kW must pay:

  • for the whole power capacity installed – including that contracted to the electricity company and the power from the PV installation
  • a tax on the electricity they generate and self-consume

There are some exemptions and local differences. For example installations in the Canary Islands and the cities of Ceuta and Melilla are exempt from the second tax.  If you do have extra electricity from your solar power instillation and your system is less than 100kW then you are not allowed to sell any extra electricity made but must donate it for free to the grid. It’s really not a system likely to encourage people to invest in solar power.

Those who advocate solar power in Spain are angry that self-consumption should be penalised in this way in one of the countries most able to generate it. Owners of PV installations are required to register with the government and connect to the national grid or face very large fines. The fines are ridiculously exorbitant, as is often the case when the government wants to make a point.


At the heart of the failure of the government to support solar energy production are major issues to do with the Spanish electricity market. The country’s electricity system is in deficit with its running costs exceeding the sale of power.

The reasons underlying this deficit are up for debate. It is claimed that Spain produces too much electricity at a high production cost. During the construction boom there was optimism that this surplus could be used. With the slump, this proved not to be the case, and, some argue, the level of subsidy of renewals was excessive.

Some claim that the PP Government has acted in the interest of big business rather than those who are pushing towards sustainable self-consumption and to combat climate change. Others find it difficult to decide who should be to blame as a general failure to look ahead and implement realistic plans is shifted from one direction to another.

Accusations linger of key ministers sitting on the boards of the electricity companies and others set to gain from the renewable sector. Even experts in the subject can find it difficult to understand what’s really going on.

On the street, many people now prefer to reject the option of having solar panels altogether. The complexity of the taxes and legislation has discouraged many from taking the renewable energy option.  This makes little sense in a country with so many sunny days and a very high monthly electricity cost, especially in comparison to average earnings in Spain.

In 2015, El País in English estimated that the average electricity bill ran at around €80 a month per person, claimed to be the fourth highest in Europe.  Between 2006 and 2012, it’s estimated that Spain’s electricity bills increased by 60%, leaving many households unable to pay their bills and having their supply cut off or making the choice between heating or food.

Changes on the horizon regarding solar energy in Spain

Those promoting renewable energy sources have hoped that each general election could lead to a reversal of the punitive laws. Many Spanish politicians do not agree with the imposition of the tax or the current approach to energy production.  There are still hopes for reform with only one political party continuing to support the status quo. However, whilst Rajoy and the PP remain in charge it will be difficult to topple the law even though there is so much opposition to it.

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In January 2017 a law proposal was registered in congress that would mean the beginning of sun tax removal. The proposal includes the right to solar energy in Spain without charge and indicates that several consumers should be able to pool their power as part of a self-consumption facility to help tackle poverty.

Those supporting the government argue that attacking solar power was the only way to address the electricity deficit in the country during a time when the books needed to be balanced. Those in opposition are clearly saddened to see Spain’s solar superiority now in tatters as other countries accelerate theirs.

Whatever the state of the electricity companies it hardly seems fair to penalise those who have invested in Spain’s solar future, or those who want to do their bit to address climate change.

Moreover, if you would like more information about the other types of taxes you need to pay in Spain as an expat or as a property owner, you can download this free guide.

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Leave a comment


Liz Yarde

1 September, 2017 2:12 pm

One of the problems with
One of the problems with installing solar energy onto private residences is the inability to store the excess production locally. Current battery technology isn’t up to the job. However, new battery technology is on the horizon primarily for use in business, but in years to come I suspect that the batteries will be small enough to store domestic electricity.

Arjun L Sen

2 September, 2017 9:46 am

The European Commission’s
The European Commission’s directive on solar energy sets a binding target of 20% by 2020. Clearly the PPs ‘,sun tax’ is incompatible with this directive. I would be interested to know why the ‘sun tax’ has not been challenged by Spanish consumers in the European Court.

Philip Tamahori

4 September, 2017 11:28 pm

So Spanish government
So Spanish government ministers are appointed for their very low I Q. Having such a low intelligence in Madrid
proves political policy there is determined by business profit margins for those in power & certainly not for the
future of Spain & its people!