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ELECTRICITY

What you should know before getting solar panels for your home in Spain

Spain is no longer the country that ‘taxes the sun’ and solar panels are quicky becoming one of the best ways to cut costs at a time when electricity is more expensive than ever. But there is still a lot you need to know before making your Spanish home solar-powered.

Published: 22 September 2020 13:32 CEST
Updated: 22 March 2022 11:59 CET
What you should know before getting solar panels for your home in Spain
Photos: AFP

It’s hard to believe that until 2019 Spain was known to experts in photovoltaic energy as the country that ‘taxes the sun’.

Legislation introduced in 2013 by Spain’s then-ruling Popular Party made it compulsory for any individual or company to hook their solar panels up to the national grid to be metered and taxed, or face fines running into millions of euros.

The law was slammed as “stupid” and “ludicrous” in international publications, with Forbes writing: “Spain is now attempting to scale back the use of solar panels – the use of which they have encouraged and subsidized over the last decade – by imposing a tax on those who use the panels”.

Luckily, this controversial ‘solar tax’ is now a thing of the past, after the law was scrapped in 2019 and other measures were introduced to make energy self-sufficiency easier.

This seems to have spurred a ‘solar panel rush’ in Spain, along with the fact that national electricity rates in the country have kept beating records in 2021 and 2022.

The price of electricity in Spain’s wholesale market was set at €544.98 per megawatt hour for Tuesday March 8th 2022, an all-time record for Spain’s energy sector.

One of the smartest ways to stop paying these extortionate prices is by installing solar panels at your home in sunny Spain. 

READ ALSO: 11 ways to cut costs as Spain’s electricity rates beat all-time price records

So if you’re thinking of joining this renewable energy revolution while saving money on electricity bills, here’s what you need to know first.

What’s the cost of installing solar panels in Spain?

In the last decade, the cost of having solar panels installed at home in Spain has fallen by 50 to 70 percent on average and the prices continue to fall. 

A study by Spanish consumer group OCU ranked the most powerful solar panels on the market, with prices ranging from €260 to €441 per solar panel:

  • Sunpower SPR-X21-345: €441
  • Panasonic VBHN325SJ47: €275
  • Aleo X59: €350
  • QCells Q.Peak-G4.1 305: €260
  • REC 280TP: €379

There are of course many more solar panels on the market, some cheaper and some considerably more expensive.

Giving a rough total price is technically impossible as it depends on many factors such as the size and features of your home (which may lead to extra costs) and how many solar panels you will install, whether or not they have a battery to accumulate energy and other characteristics.

According to Spanish website Cronoshare, which acts as a portal where users can compare rates for anything from plumbers to cleaners in their area, the total price paid for solar panel installation in single-family homes in Spain ranged from €2,000 to €10,000.

Labour costs for installations range from €600 to €1,200 and wiring and metering installation can also set you back €1,200. 

Ernesto Macías, general director of Solarwatt Spain, estimates the total cost of installing solar panels in a 125sqm family home in Spain is around €6,000.

This is similar figure to that of comparison site Selectra, which in August 2021 reported that the cost of installation in a single-family home in Madrid with consumption of approximately €50 to €60 per month will be approximately €6,000 to €8,000.

There are also grants in certain regions that will cover up to 60 percent of the cost of the solar panel system. Find out from your local town hall (ayuntamiento) if grants are available in your area. 

Although the final price depends on many factors, installing solar panels at home costs around €6,000 in Spain. Photo: Cesar Manso/AFP

How many solar panels should I install?

Energy price comparison site Selectra states that for a single-family home to be energy-sufficient, at least three solar panels of 320W of power for every 2000 kWh of annual consumption are needed.

But there are other factors at play that could increase this sum, including:

-Your energy consumption profile (your monthly bill will be key to determine the kWph you need and therefore the number of panels).

-The amount of space on the building and its orientation, another important factor to determine the power of the solar panel to install.

-Pre-existing building and wiring features which can play a part in the size and design of solar panels.

-Rates contracted with the electricity company.

Not every rooftop in Spain is suitable for solar panel installation, which has been spurring some homeowners to install them in their own gardens or on the ground, or to team up with other neighbours and have them installed in shared green spaces.

It’s also worth noting that photovoltaic installations last between 25 and 30 years. It increases the value of your house but it may also be worth considering if you’re going to stay there long enough to get a return on investment.

Will my solar panels be connected to the national grid?

In the majority of cases, they are but you are not obliged to by law in Spain. The advantage of being linked up is that you get money back if your solar panels produce excess electricity and if they don’t produce enough energy you can cover your needs by pulling power from the grid.

If you’re not connected to the grid, you’ll logically have to be self-energy reliant at all times and will probably need energy storage systems ie. batteries.

READ ALSO:

What does the Spanish government say about solar panels?

A Royal Decree published in 2018 and which came into force in 2019 stated how “Spain’s energy system has begun a process of transition towards a new paradigm characterised by decarbonisation, decentralisation of energy generation, electrification of the economy, more active consumer participation and more sustainable use of resources”.

In other words, the Spanish government is no longer ‘taxing the sun’ as it once did and is making it easier than ever for people in Spain to ‘go green’.

In terms of advantages for those thinking of installing solar panels, these are:

1. Elimination of the notorious ‘sun tax’
2. Sale of surplus energy, with the only disadvantage being that the amount deducted cannot be higher than the amount to be paid for the energy consumed, included in the same bill.
3. Solar panels in blocks of flats are now allowed. For this to happen, one-third of owners have to be in favour of the installation.
4. No limits on the amount of power generated by solar panels, which previously wasn’t the case.
5. Simpler bureaucratic procedures, with the main remaining requirement being a certificate of electrical installation and notifying municipal/regional authorities. 

Are there any subsidies and tax deductions for the installation of solar panels?

Yes. Spain’s Tax Agency may deduct 20 percent of the amount spent on installing solar panels at your first or second home in Spain, as long as they’re meant for home consumption and not an economic activity. These deductions can be even higher (up to 60 percent) by proving the energy efficiency improvement in a residential area. 

Different regions in Spain are also introducing their own legislation to encourage renewable energy development, so make sure to check your autonomous community’s website to find out if there are other subsidies you can benefit from.

There are sometimes even municipal regulations that can cut costs further, such as deductions that apply to the IBI (Real Estate Tax), which can be up to 50 percent in some cases, as well as the ICIO (Tax on Installations and Constructions Works) where reductions can reach 90 to 95 percent of the total.

For example, in 2022 Madrid authorities are offering to cover 30 percent of the cost of solar panel installations of up to €15,000 and  Barcelona and Seville city halls are giving 50 percent IBI deductions for homeowners who install solar panels.

To help you with your search, type in “bonificación paneles solares” or “deducciones paneles solares” and then your town, city or region to find out if there are discounts available for solar panel installations in your part of Spain. 

READ MORE: The home improvements you can get a 60 percent tax deduction for in Spain

How much can I save on electricity bills if I install solar panels?

A 2022 study by solar panel company Solarwatt found that a family of four living in a 120sqm property in Spain can expect to save around €8,420 in electricity costs over the course of five years, covering the cost of the initial installation in less time than that.

According to Francisco Campos, director of solar panel company Sitecno, the average time it takes homeowners with solar panels to recoup their investment is getting smaller as photovoltaic technology becomes more efficient.

How much money you can save depends on your consumption profile, the quality and positioning of the solar panels as well as other factors.

Energy price comparison site Selectra estimates that for a single-family home in Madrid with an average electricity consumption of €200/month (with time of use tariffs, “discriminación horaria”), solar panels can save €45,000 in bills during their entire lifespan (at least 25 years on average). 

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Member comments

  1. I had solar (PV) panels installed about 2 years ago. It took over a year to get Endesa to change the contract to recognise the fact – but which actually seems to have resulted in me being on a more expensive tariff than I was on before. Worse, I have repeatedly queried my bills because they are not showing any rebate for the (sometimes quite substantial) amount of electricity I put back into the grid, but Endesa stubbornly ignore my requests. Doubtless I am saving money by having the panels, but Endesa are clearly refusing to confirm to the government directives and making it as difficult as possible to get all the appropriate benefits. If you’re planning on installing them and you are currently with Endesa, SWITCH COMPANIES FIRST!!!

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For members

TAXES

How foreigners in Spain’s capital can pay less tax with the new Mbappé Law

The regional government of Madrid is finalising the approval of the so-called Mbappé Law, a very favourable new personal income tax regime for foreigners who settle and invest in the Spanish capital.

Published: 23 April 2024 16:44 CEST
How foreigners in Spain's capital can pay less tax with the new Mbappé Law

Similar to Spain’s Beckham Law, introduced in 2005, this piece of legislation is named after a famous footballer who will be the first to benefit from lower tax rates, as will other foreigners in Madrid.

Kylian Mbappé is a French footballer who currently plays for Paris Saint-Germain, but looks set to sign for Real Madrid this summer.

The objective of the right-wing Madrid government of Isabel Díaz Ayuso is to attract more foreign investment to the region with beneficial fiscal rates.

READ ALSO – Beckham Law: What foreigners need to know about Spain’s special tax regime

Unlike the Beckham though, the Mbappé Law is only designed to benefit foreigners who move to the region of Madrid, it’s not open to those who want to move elsewhere in Spain.

Also unlike the Beckham law, foreigners will only be able to reap the rewards of the Mbappé Law if they invest money into the region. This could be in the form of investments in companies or in vehicles, but it cannot include investments in property.

Specifically, applicants will be able to deduct 20 percent of all the money they invest in the Madrid region.

The law applies to regional personal income tax, which accounts for approximately half of entire tax payments in Spain, since the other part corresponds to the State’s collection.

Normally, a foreigner like Mbappé will be taxed in the highest income bracket, as they will earn well over €300,000 gross per year.

When the law is finally approved however, Mbappé could avoid paying the regional income tax entirely, in the event that 20 percent of his Madrid investments represent the same amount that he would have had to pay in taxes on his salary.

READ ALSO: Why you should move to this region in Spain if you want to pay less tax

How will the Mbappé Law work?

For example, if Mbappé earned €40 million gross (not his actual salary), he would normally be charged €18 million in personal income tax.

Of this, 24.5 percent would correspond to the state tax, and this would have to be paid as normal. This means the state would collect €9.8 million from him in tax.

The change happens with the rest of the tax – the regional tranche. If he doesn’t make any investments, which now seems unlikely, he would have to pay €8.2 million in tax to Madrid.

If on the other hand the French superstar invested €40 million in Spanish companies or state bonds – he could deduct €8 million, which represents 20 percent of that amount.

This would mean that Mbappé’s tax rate would remain at 24.5 percent, a marginal rate that is slightly higher than the personal income tax for a worker who earns €20,000 and receives around €1,300 net per month.

As a percentage, of course, the amounts in Mbappé’s case are going to be huge. So, instead of paying €18 million in total, he would only pay €9.8 million.

Overall, this legislation signals that Madrid will become even more attractive to foreign investors.

By contrast, those who move to Catalonia will have to pay 25.50 percent in regional income tax, which added to the 24.5 percent of the state tax would increase personal income tax by half. So as a Real Madrid player Mbappé would earn €30.2 million, but if he signed for Barça he would pocket €20 million.

What’s the catch?

There are a few caveats to the new law, which primarily depend on how long you stay in Madrid. The new regulations establish that you have to stay and live in Madrid for a total of six years. If you leave before those six years are up, then you will be forced to return part of the tax savings you made.

What does this mean for Madrid?

The regional government of Madrid estimates that 30,000 foreign investors could choose to move to the region specifically in order to benefit from the new law and that it will cost the public coffers €60 million per year.

The idea is that Madrid will continue to attract foreign investment. Madrid’s leader Isabel Díaz Ayuso recently claimed that: “Two out of every three euros that arrive in Spain as an investment from abroad do so in projects that are developed within the Community of Madrid. In the last decade, the flow of investments has doubled”.

Madrid already has some of the best tax incentives in Spain. Residents pay less tax on their income, assets, inheritance and property transactions and conditions are beneficial to high-income earners in particular.

Financial experts agree that Madrid is among, if not the top region, with the most lenient tax system in the country, and when the Mbappé law comes into force, the region will benefit from even more incentives.

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