Now that I produce my own electricity, what happens next?
Solar power is very much in fashion in Spain. And since the change in the law in 2019, we’ve seen a massive boom in the number of photovoltaic (PV) systems installed throughout the country. However, there are considerable price differences between the many electricity suppliers, with up to a 300% difference in the price for kWh consumed. The same applies to the feed-in. So, which provider is the most beneficial? And who pays the highest feed-in tariff?
Well, the answer’s are not that simple!
Note 1: Firstly, we have to define two basic concepts: in Spain, there’s a “mercado regulado (regulated tariffs)” as well as “mercado libre (free tariffs)” for electricity prices, both of which could be of interest depending on your circumstances. The mercado regulado is probably more beneficial for lower consumers (flats, small houses, etc.), as the State defines the price (fixed price with up to six tariffs per day). Meanwhile, the mercado libre is defined hourly on the electricity exchange (OMIE-indexado). This is also monitored by the State, but prices vary much more. However, because you pay what the electricity costs at that exact moment, you could say that the mercado libre is the more “honest” electricity tariff. In the summer, prices are highest at around 2pm (this is when consumption is highest), and lowest at 4am. However, this is not of interest to those with a rooftop PV system because especially in the midday is when they’re approaching peak output, producing more than is necessary, not consuming nearby nothing from the grid.
Note 2: The Spanish state pays a subsidy for the electricity fed into the grid up to the amount of your own consumption. So if you’re not at home and consume about 100 kWh per month, but produce 600 kWh, you will only be reimbursed the 100 kWh feed-in, and you’ll give away the surplus to the supplier. While this initially appears to be unfair, it’s because there are consequences: electricity storage (i.e. batteries) is experiencing high demand despite their still relatively high prices. Self-produced electricity is first consumed on-site, then the battery is charged, and only afterwards is any surplus sold back to the electricity providers through feed-in.
Note 3: Some providers now offer “cloud” electricity storage variants due to the legal maximum feed-in limit. This means that instead of buying a battery yourself, you upload the excess kWh produced into a cloud battery and then retrieve it when you need it another time (for example, at night or in winter). Of course, this is not for free; most providers ask for monthly fees, and others reimburse the kWh only at certain times and with limitations. Again, all quite opaque. Of course, none of the providers will return the stored kWh in its entirety – only parts of it.
Note 4: Besides paying for your electricity consumption in Spain, you also have to pay for the contracted connection capacity. Those who have agreed to a tariff with a connection capacity of over 15 KW (3.0 TD) can confirm that this can be costly. It’s worth finding out the maximum power required throughout the year from the company responsible for the infrastructure (e-distribución). If, for example, the peak power consumption is at a maximum of 7 KW (averaged over the year), you can avoid paying connection fees for 15 KW and potentially reduce the connection power to 7.5 KW. In this specific case, this would save you approximately 900 € + VAT a year. That said, it’s important not to set the maximum connection capacity too low, as electronic meters may limit power usage (and your lights may go out). On the e-distribución website (a true gem), you can find very interesting tables regarding consumption, fed-in electricity, etc.
Do you understand everything now? As you can probably already see, finding the best service providers without meaningful guidance and practical price comparisons can be extremely challenging – because everyone is out to make a profit. As of July 2023, you can achieve feed-in tariffs of up to 14 cents per kWh, while electricity prices range from 15 to 17 cents per kWh on average. Cloud solutions typically come with a basic fee and compensation of up to 4:1 (upload 4 kWh and get 1 kWh back), while others may offer a 2:1 ratio but with higher base fees.
If you want to understand all of this better, feel free to reach out to us! We’d be delighted to clear up any doubts you may have.
Our home inspector service is a straightforward and inexpensive appraisal to professional standards. It can help you to cut out practically all risks typical of buying a house in Andalusia. We recommend it for anyone looking to buy a property. More: