The sun on the Costa del Sol and Costa de la Luz

In 2011, the conservative party Partido Popular took control of the Spanish government. Times were tough, with an economic and real estate crisis, and the State treasury empty, among other challenges. Prime minister Mariano Rajoy and the PP chose to implement austerity measures, no matter the cost, to avoid a European bailout similar to Greece’s.

One of the most controversial decisions was ending State subsidies for solar power and even prohibiting or taxing the self-production of electricity in the same year, 2011. This gave rise to the so-called “sun tax”. Perhaps even more absurd was the regulation that prevented residential communities from installing solar systems in shared spaces, such as rooftops of high-rise buildings, effectively banning the use of self-produced electricity in these communities.

Looking back, it’s clear that a significant mistake was made, with far-reaching consequences. Those who had applied for feed-in permits and invested heavily in large solar parks found themselves in a precarious situation when the law changed, leaving them without any State support. NextEra Energy was among the affected companies, facing the challenge of a 50 MW investment in Spain, with substantial capital already committed. In response, the American investors pursued legal action before the European Court of Justice and emerged victorious. Spain was subsequently ordered to pay a fine of 300 million euros in 2019. Furthermore, the contentious Rajoy law was invalidated, leading to an immediate revival of support for renewable energies.

In October 2019, with Socialist prime minister Pedro Sánchez at the helm, the legislation was amended to align with the court ruling, once again permitting the production of renewable energies and re-establishing feed-in mechanisms. However, a minor drawback was that the law did not specify the exact feed-in tariff rates.

Sánchez took over the reins of the Spanish State in 2018 with a minority government. Since 2020, he has formed a formal coalition with the left-wing Podemos party and regional minority parties (Bildu and ERC). Notably, he established a new ministry with the somewhat obstinate name Ministry of Ecological Transition and Demographic Challenge.

In short, renewable energy is once again profitable. Previously prohibited installations are now allowed, and there is once again remuneration for fed-in electricity.

Similar to Germany, individual electricity generation systems such as PV installations must be registered in Spain, which is done with the regional government. After the registration is completed (through the “Boletin” issued by the installer and endless paperwork), the feed-in agreement must be negotiated with the respective electricity supplier.

In principle, it sounds good so far. But only in principle. The regulations are still relatively new, and everything takes unbelievably long (at least six months with the regional government). As a homeowner, you will quickly realise that companies like Endesa and other suppliers are not very eager to pay the feed-in tariffs. You’ll have to endure tiresome phone calls and deal with sometimes incompetent (or overwhelmed?) staff. So, you’ll need a lot of patience in order for the electricity supplier to accept the contract changes. With sufficient persistence, however, it can work out.

But this is where it gets interesting: Endesa provides around a 40% discount on the kWh price for PV installations (as of October 2021), and they reimburse 5 cents per kWh for the fed-in electricity. This offer is quite attractive as it incentivises and rewards all individuals who generate their own electricity, regardless of the size of their installations.

Solar installations make a lot of sense in Spain, particularly because heating and cooling systems mainly rely on electricity powered by heat pumps. By implementing intelligent controls and taking advantage of off-peak electricity tariffs, you can significantly reduce the costs of these energy-intensive systems. Depending on usage and management, a 10 kW PV system (costing around 20,000 euros) should pay for itself in less than eight years. Additionally, you’ll be helping your conscience and the environment. As a general rule, the larger the residential building, the more economically beneficial it becomes. However, it’s important to note that the feed-in tariff alone may not be particularly exciting as a deciding factor.