The paradox of the photovoltaic sector in Spain compared to Europe: higher profitability but less investment


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Placas solares

The regulation on how EU Member States should establish their support schemes for renewable energies is set out in the Renewable Energy Directive (2009/28/EC), which gives Member States wide freedom in the choice of support schemes.

While it is true that Spain has always been one of the leading countries in supporting renewable energy, the regulatory framework changed in 2007. Prior to 2007, the level of support for photovoltaics was relatively high, which led to the expansion of installed PV capacity. But this expansion of the PV sector, coupled with other external factors, led to the deficit in the Spanish electricity sector. This deficit was therefore used as the official justification to ostensibly cut the Spanish support system for renewables1, through royal decrees to cut support for renewables and introducing a 7% tax on electricity generation for all installations. These retroactive legislative changes and the moratorium on support for existing installations led to the near disappearance of investments in photovoltaic energy, the loss of income for the owners of the installations and a serious loss of employment in the industry2. In addition, a new law on self-consumption was introduced in 2015, which introduced a so-called "solar tax" as it applied only to self-generated solar electricity.

Nonetheless, from 2018 and 2019 a new liberalised regulatory framework was established, which took the form of Royal Decree on Self-consumption 244/2019 and Royal Decree Law 15/2008, through which economic and administrative barriers were eliminated, including the "sun tax". In addition, a simplified compensation mechanism was established, through which self-consumers can receive financial compensation for the surplus energy they feed into the grid3.

It is important to understand that support schemes and legislation on self-consumption are essential to make renewable energies viable, so the regulatory framework must continue to make progress in the area of self-consumption. For example, it is essential to define an electricity tariff that accompanies the process of ecological transition and to eradicate the barriers that still exist to self-consumption and energy efficiency. A relevant measure would be to lower the weight of the fixed part of the electricity bill to the European Union average of 23%, compared to Spain's 40% - the highest fixed term in the European Union - as well as increasing the price of the variable part. Through these measures, not only will consumers be able to see the energy and economic savings reflected in their bills, but they will also be encouraged to make rational use of energy4.

Although the legislative renewal established by Royal Decree 244/2019 has been well received by the sector, a comparison with the legislative framework of other European countries is necessary. For example, Germany, which is one of the global leaders in clean energy production, has one of the highest photovoltaic energy productions in the world, even though it is far from being the country with the most hours of sunshine per year. In Germany, more than 39% of the country's net consumption comes from renewable systems, with 7% coming from photovoltaics5. This has been made possible by the Renewable Energy Sources Act of 2000, which guaranteed producers of solar self-consumption a fixed-price feed-in tariff for the energy fed into the grid for a period of 20 years. In addition, it also established an auction system for large producers, which has been essential for the growth of the sector. The German government even amended the regulations in 2019 as it considered the renewables market to be over-subsidised6France introduced the Energy Transition for Green Growth Act in 2015, which introduced energy efficiency improvement plans for buildings to support self-consumption. In addition, the French government has committed to increase the budget for renewable energy by around 71 billion euros by 2028, with the clear objective of increasing the share of photovoltaic energy fivefold.7.

Therefore, although the new self-consumption regulations bring Spain closer to other EU countries, it is still far from being a pioneering country in promoting renewable energies and self-consumption. Therefore, Spain should continue to evolve in the regulation of self-consumption and renewables, not only because of the obvious environmental benefits, but also because of the potential, in this case, photovoltaic potential of this country. In Spain, producing a megawatt of photovoltaic energy costs 30 euros, while in Germany or France it costs 40 euros and in the United Kingdom 60 euros, added to the abundance of sunshine hours in Spain. Moreover, the benefits would not only be environmental, but also economic, as it would be an opportunity to reduce dependence on foreign oil and gas, which costs 40 billion euros every year8.


1 Environment America Research & Policy Center and Frontier Group (2019): “Shining Cities 2019: The Top U.S Cities for Solar Energy”.
2 Ibidem
3 UNEF: “La nueva regulación permite el despliegue del autoconsumo en España”. [Web]. Accesible en:
4 Ibidem
5 Cambio Energético: “La Normativa de Autoconsumo Española Frente a Otros Países Europeos”.
6 Ibidem
7 Ibidem