Homeowners to be taxed for producing their own electricity

The new Energy Bill proposed by the Spanish Government will levy a series of taxes and amazingly expensive tariffs on home-owners who want to install their own solar panels or windmills, in an apparent attempt to stop citizens generating their own free electricity. The government is being accused of trying to tax citizens out of the market, forcing them to buy electricity from the National Grid instead.

It’s as if we had to pay for eating the tomato we grow in our own back garden, explained  one charity which aims to help homeowners become carbon neutral.

Spain has an “tariff deficit” – the country has to pay its energy producers several billion a year because it continue to make the producers sell energy for less than it costs them to make it.

Ironically enough, the last decade’s push for renewable energy has made the situation worse, as generous subsidies to windfarms and solar farms were in the long term uneconomic.

Spain’s broke and can’t pay this. So it’s responded by cutting the subsidies (which means, according to the industry, most small solar farms are looking at bankruptcy as they can’t service their debts at the new lower selling price) and putting up energy prices again and again and again.

The latest modification of your electricity bill means that the amount you pay for electricity is minimal – we are now paying more in base costs than for the energy we use. The end idea, according to the State, is that we all have to pay a large access quota and then electricity is quite cheap.

Meaning that cutting back on the energy we use won’t reduce our bills.

Back to the home energy production taxes and the (not yet implemented) new law:

The new law says you can now be fined up to 30 million euros for not registering your home solar panels on the national database (the new law makes no difference between home use and large corporations). This is to make sure we’re all on the database, and can be charged accordingly.

If you generate your own electricity you will now be forced to install a very expensive new meter, which is almost as expensive as a solar panel. This meter also records the amount that we generate and use ourselves, and charges us the tax on each kilowatt.

Meaning that if currently the average homeowner pays off his solar kit in 12 years, once the new law comes in, it will take us 23 years to pay it off and start seeing savings.

Oh, and if you already have such a kit installed – you also have to comply with the new laws.

From El Mundo:

The government’s energy reform has greatly angered the renewables industry. “Of all possible scenarios, this is the worst one,” says José Donoso, chairman of the Spanish Photovoltaic Union (Unef), which represents 85 percent of the sector. “They haven’t approved anything specific yet on self-production but they’ve managed to kill it already.”

Donoso is referring to the increase in the fixed portion of electricity costs, which is set to rise 77 percent for a regular household bill, and even self-producers cannot avoid paying it. Meanwhile, the variable portion of the bill, representing actual use, goes down 23 percent. This is the part that renewables can reduce.

“Until now, expenditure was around 30 percent of fixed costs and 70 percent of variable costs. We are moving toward a 50-50 balance, which makes any initiative aimed at generating your own energy less attractive,” notes Ignacio Cruz, a researcher in the Renewable Energy division at the Center for Energy, Technology and Environmental Research (CIEMAT).

3 Replies to “Homeowners to be taxed for producing their own electricity”

  1. Regarding the potential impact on domestic solar installations, I would like to point out the following,

    1. The white paper is a draft and that alone.
    However if approved how would it change a domestic electricity bill? For this exercise I have used a clients Endesa bill with whom they have a 5.75Kw supply and use 500Kwh per month.
    The monthly supply cost (Potencia) is 10.00 Euros
    500Kwh for the month is 75.24 Euros
    Total electricity bill 85.24 plus IVA = 106.24 Euros.

    Assuming that the white paper is approved and using your quoted figures of 77% increase for the potencia and 23% decrease for the unit costs, The same electricity bill would be as follows,

    The monthly supply cost (Potencia) is 17.70 Euros
    500Kwh for the month is 57.94 Euros
    Total electricity bill 75.64 plus IVA = 91.52 Euros.
    Thus a saving for the householder of 14.72 Euros!

    This consumer has now benefited from the proposed change and saves around 175 Euros a year.

    2. However, as we are all concerned about our environment and want to help the planet; we would all like clean energy but at a price. If the paper goes through and Net Balancing comes into effect, solar power systems will be allowed to feed back into the grid (subject to contracts etc.).
    A 3Kw grid tied system will produce around 5,000Kwh per annum in our region (Almeria) and will cost around 6,000 Euros installed. Due to being able to send any excess power in the day to the grid and then reclaim it in the night or as and when required, the annual consumption of the same house above would be 1,000Kwh.
    12 Months Potencia = 212.40
    1,000Kwh = 116.00 Euros
    Total annual electricity bill = 328.40 Euros

    On the new tariffs no solar = 1100 Euros per annum
    On the new tariffs with 3Kw solar = 330 Euros per annum.
    Saving of 770 Euros per annum. Hence, if there were no increases in electricity prices or the standing charge (would you bet on that?) the system would take 7 years and 8 months to pay for itself or a 13% return on your investment. Considering that you are producing clean, renewable energy, helping to do a little for the environment and getting a 13% return on your money, it doesn’t look so bad to me.

    Either way, the consumer wins. Cheaper electricity!

    I know that this will spark a few comments, but I really do believe solar can help replace fossil fuels. However, it must be done at a sustainable rate for governments and us the people alike. We all make fun of how governments balance their books or don’t (lol), but I wouldn’t want the job.
    In summary, yes we would all love to “go green” if it was free and saved us money. Where do you draw your line in the sand?

  2. Fine in theory Vic, but yoú haven´t factored in the increase in the tax on consumo. So it´s not an actual 23% decrease.
    In any case, you´re missing the thrust of the argument, which is that the home consumer who is dumping excess energy into the National Grid will be taxed for doing so, and will also be taxed for the energy produced at home and consumed at home. They will also have to install their own (expensive) meters for doing so.
    The Spanish Photovoltaic Union (Unef) reckons that if the average home solar kit takes 12 years to pay off, it will, under the proposed new law (second Reading now by the way) take the same installation 23 years to be paid off.

  3. Thank you for the comments David. However if Unef believe that the average home system takes 12 years to pay off, where did they get this figure from? On their site they are quoting a 2.4Kw system and lets play it safe and use zone 3 for the PRSH (Peak Radiation Sun Hours) which is the north of Spain. Here is Almeria we are in zone 4 and 5 and hence have more sun.
    Anyway, 2.4Kw of panels – south facing will produce around 900 Euros of electricity (obviously this will vary slightly on tariff, pitch etc.) hence in 12 years it will have saved over 10,000 Euros of electricity. The cost of a 2.4Kw system is less than 5,000 Euros and hence less than a 6 year payback. So how can it be currently 12 years? Where did they get their “average cost” from?
    They say that over the last few years the cost of solar has dramatically reduced, may it be possible that they forgot to factor this in?

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