How Spaniards are snapping up solar panels as energy crisis bites

Demand for solar panels has shot up to unprecedented levels in Spain as Europe's energy crisis shows no sign of letting up, in a welcome boost for a sector with huge potential.

How Spaniards are snapping up solar panels as energy crisis bites
Demand for solar panels has shot up to "unprecedented" levels in Spain as Europe's energy crisis shows no sign of letting up in a welcome boost for a sector with huge potential. (Photo by JAVIER SORIANO / AFP)

“Here we have sun almost all year round,” said Paloma Utrera showing off the black panels installed on her roof in Pozuelo de Alarcon, a well-heeled suburb of western Madrid.

“We need to make the most of it.”

Like many Spaniards in recent months, Utrera has started producing her own electricity after installing 13 photovoltaic panels on her roof with a total output of 4.5 kilowatts.

“It’s not cheap” but with the help of EU and government subsidies, “the savings we’ll make on the electricity bill, the investment isn’t that bad,” she said.

The 50-year-old airline industry employee said she’s halved her electricity bills since having the solar panels installed in September.

“It’s a really worthwhile investment,” said Utrera.

According to Engel Solar, which carried out the installation, rooftop solar panels can generate between 50 and 80 percent of the average household’s electricity needs.

And given the current prices of electricity, that makes for an “interesting” proposal, said Engel Solar commercial director Joaquín Gasca.

Set up in Barcelona in 2005, the company with 200 employees has seen its turnover soar fivefold over the past two years and expects to see a further jump in 2023.

“The phone just never stops ringing, it’s crazy,” said Gasca.

Paloma Utrera Martínez says she’s halved her electricity bills since having the solar panels installed. (Photo by JAVIER SORIANO / AFP)

A rooftop investment

And it’s not just individuals.

Businesses and public entities are also getting on board, driven not only by the energy crisis linked to the war in Ukraine but also encouraged by the public funding available through the EU’s vast Covid recovery plan.

All of this has given an unprecedented boost to rooftop solar in the Iberian Peninsula.

“Until about a year ago, if you looked at the rooves in your town or city, you would hardly see any solar panels for self-generation… but that’s totally different now,” said Francisco Valverde, a renewable energy specialist at Menta Energia consultancy.

Jose Donoso, head of Spanish solar power lobby UNEF which groups some 780 businesses, agreed.

“People are seeing how their neighbours are putting in self-generating installations, that they’re happy with them and are saving money, so they themselves are encouraged to get solar panels,” he told AFP.

UNEF says the installed rooftop solar capacity should exceed two gigawatts this year, a figure more than three times higher than in 2020.

Solar power has become “very competitive” with a cost that is “90 percent lower than what it was 14 years ago,” Donoso said.

“People have started realising that their money is better off invested in their rooftops rather than sitting in the bank.”

Commercial director of the company EngelSolar Joaquín Gasca has said his company’s rooftop solar panels can generate between 50 and 80 percent of the average household’s electricity needs. (Photo by JAVIER SORIANO / AFP)

Democratising energy

For the photovoltaics industry, this resurgence of interest is a welcome development after years in which the sector was left to languish.

As Europe’s sunniest country, Spain was one of the leaders in solar power at the start of the century until the 2008 financial crisis halted the boom.

Since then, it has fallen behind neighbours.

A right-wing government threw shade on the sector by cutting subsidies. It then introducing a tax on households that sold excess electricity to the national grid, a move derided by critics as a “tax on the sun”.

But the tax — which NGOs say was imposed following pressure from energy giants worried about competition from self-generated electricity — was shelved in 2018 when the left came to power and stepped up support for renewable energy.

Since then, the sector has grown rapidly.

Self-generation “democratises energy and takes control away from the big energy corporations that want to retain their hold on power,” Prime Minister Pedro Sanchez said at the end of October.

He predicted between nine to 14 gigawatts of new rooftop solar by 2030, out of a total of nearly 40 gigawatts of new solar power.

In spite of its vast potential, solar energy last year supplied just 9.9 percent of Spain’s electricity — far behind the 23.3 percent generated by wind power, the 20.8 percent provided by nuclear power or the 20.8 percent contributed by natural gas power stations.

Today only “four or five percent” of Spanish homes have solar panels installed, “meaning there is a lot of room for growth,” said Gasca.

It has the potential to be “the leading source of energy” in the Iberian Peninsula, he added.

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Where your taxes go: how local government spends your money in Spain

Have you wondered how your local town hall raises funds and what your money is being spent on or how it's divided? Here's what you need to know.

Where your taxes go: how local government spends your money in Spain

Politics in Spain is incredibly regional and localised, with governments at the regional (known as autonomous community) and local level (municipality) wielding significant amounts of power over how things are done.

Local governments also have a significant amount of power over how and where your money is spent and on what. If you’ve ever wondered where it all goes to, then read on. 

Where the money comes from?

Municipalities in Spain generally receive money in three ways: from the government, from the regional government, and, of course, from its residents: that is, the local taxes they levy and the fees they charge for providing public services such as rubbish collection.

According to RTVE, money from the national and regional governments combined makes up around a third of municipal income (35 percent) on average across the country. But it’s municipal taxes that generate the most money for town halls, often 50 or 60 percent of the total income they receive.

Municipalities charge their citizens three taxes: a property tax, known as IBI; a road tax, known as VTM; and the Economic Activities Tax, called the IAE.

There are also two optional taxes that can be levied at a local level: the IIVTNU, which taxes the surplus value of a property when it is sold, and a tax on construction and buildings works that effectively functions as a licence to be able to build in the municipality.

READ ALSO: Ten acronyms you need to know to buy a property in Spain

Generally speaking, the tax that costs inhabitants the most (and brings in the most for town halls) is the Impuesto sobre bienes inmuebles or IBI, wich is the property tax. According to statistics from the Spanish treasury, on average it contributes over a quarter (27.5 percent) of the non-financial income to municipal governments and councils.

READ ALSO: What is Spain’s IBI tax and how do I pay it?

In fact, in Spain, there are fifty municipalities that collect more than €2,000 per inhabitant solely on IBI alone.

But that’s not the norm. The average collection in Spain is €365 per inhabitant, though more than 4,000 municipalities collect less than €300 per inhabitant.

Among the most popular places for foreigners to live in Spain, the average IBI revenues per inhabitant (per year) between 2019 and 2021 were:

  • Alicante – €275.54
  • Málaga – €241.76
  • Madrid – €459.38
  • Palma de Mallorca – €275.71
  • Valencia – €299.99
  • Barcelona – €421.83

How do they spend the money?

So, what do the local governments and town halls do with all the tax money they’ve gathered from various places and how do they spend it?

Municipalities spend their tax revenue on providing public services, which can be maintaining public parks, sweeping the streets, repairing lampposts and removing graffiti.

These basic services take around up an average of 40 percent of a town hall’s total expenses, double the 20 percent they allocate to general expenses such as running and paying the staff on the city council itself.

Another 15 percent is spent on public services such as schools, libraries and sports facilities, and 12 percent goes to social services such as care and employment services. Another seven percent goes on local infrastructure such as local transport networks.

READ ALSO – EXPLAINED: How to pay less Spanish IBI property tax

The amount local governments spend, however, can vary wildly, and depend on the size, location and needs of each municipality.

Towns with less than 5,000 inhabitants allocate twice as much per inhabitant to general expenses, while bigger cities spend more on basic services, as they need to devote more resources to a much larger number of people. Often, this is reflected in the tax burden.

From 2019 to 2021, the average expenditure of the 7,751 municipalities across the country was €1,557 per inhabitant per year. Most municipalities spent between €1,000 and €2,000 per person in that time, although there were 2,200 localities below that threshold.

In municipalities of interest to foreigners, the average spend per inhabitant between 2019-2021 was:

  • Alicante – €728.86
  • Málaga – €1041.93
  • Valencia – €1069.65
  • Barcelona – €1680.50
  • Palma – €959.78
  • Madrid – €1419.59