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Home > Legal & Financial > Here Comes The Sun…At Last.

Here Comes The Sun…At Last.

You would think that the Spanish countryside ought to be peppered all over the place with arrays of solar panels, but it isn’t. It’s one of Europe’s sunniest countries, and we live in a time where investment is flooding into solar power, and the pace of improvement in the technology is exponential. Rainy old Britain has seen photovoltaic (PV) arrays popping up on domestic roofs, and agricultural land for the better part of the last decade, Germany the same, and Italy, which enjoys a similar climate to Spain has them all over. So you where are they all?

In the early years 2000s the Spanish government was keen to develop solar, and renewable power and set subsidies in place to encourage investment into the sector, and it worked. Between 2006 and 2012 the sector had grown so much that subsidies had reached €8.1 billion, the upside was that Spanish solar firms were industry leaders… the downside was that the public purse, post the 2008 financial crash, could no longer afford the subsidies, and the old, and inefficient traditional power generating companies were no longer covering their costs. By 2012 they were in the red to a combined total of €28 billion. So in the same year the national government slapped a 7% tax on all power generation. Electricity bills shot up by over 60% during the period, at a time, remember when Spain was suffering from 25% unemployment, and endemic low wages, pushing many households into additional levels of poverty. It also added extra cost to business, fueling inflation generally and reducing their competitiveness.

In 2015 the conservative government piled on the pressure with punitive taxes, the so called ‘sun tax’ to the effect that if you did have solar power in your home, you had to pay extra tax to the generating companies for the pleasure of not using their electricity.

As you might imagine the appetite for solar power in Spain fell off a cliff, and a lot of very clever Spanish companies, who had been leading the world with their innovation suddenly had almost no domestic customers, so they went and started working in other countries that were more than happy to snap up their expertise.

Last month there seems to have been a glimmer of an outbreak of common sense. Spain’s incoming Minister of Ecological Transition, Teresa Ribera of the new socialist government announced a six month suspension of the ‘Sun tax’ designed to address the absurdity that the country has only 1,000 domestic PV installations, in contrast to more than 1,000,000 in Germany.

It’s a positive step in the right direction, and if all goes as intended you should expect to see a boom in the installation of solar panels all over Spain, particularly if this six months becomes permanent. The irony is of course that Spain is now likely to become a customer of the very industry that only a handful of years ago it virtually owned. It should be reaping the rewards of its own investment in this technology, rather than buying it off somebody else.

With the rise in efficiency of solar panels, and billions poured into the development of battery technology by the likes of Elon Musk, and the Chinese government it looks increasingly likely that solar, and other renewable power technologies are going to be the dominant industries for the next 100 years and Spain squandered the opportunity to be a leader in the field. Still, it has at least jumped back on the bandwagon, and as long as the sun still rises every morning there is an opportunity to make up for lost time.

 

By Phill McCoffers