Spain To Incentivize 500 Megawatts Of Solar Capacity in 2009

by Ulrika Lomas, Tax-News.com, Brussels

02 October 2008

The Spanish Government has announced its intention to raise the cap on subsidized solar energy projects for 2009 to 500mw, a higher limit than expected.

The Spanish solar energy sector is booming, sparked initially by Mother Nature, but fanned into life by government tax incentives. Spain's installed Photovoltaic capacity has increased over 500% in the past three years, and it now has the second highest output in Europe, and the fourth largest globally. The sector employs more than 20,000 people.

INTERES, the Spanish foreign investment agency, characterises the subsidy program as follows: "The Renewable Energies Plan (2005-2010) as providing for the granting of incentives for investments by enterprises in technological innovation in the field of renewable energies, as well as the creation of lines of public aid, with a planned investment of approximately €23.6m."

When the Renewable Energies Plan was first launched a cap of 400mw was initially put into place, to cover the entire period up to 2010. The scheme was heavily oversubscribed, resulting in the entire subsidy allowance being consumed within the first year, 2007. Both domestic and foreign companies involved in the development of the sector have been eagerly awaiting news of whether the subsidy system would be extended since the scheme was frozen last year.

The industry is expected to welcome the latest news of a raised cap to 500mw, announced by the government this week. A cap of 460mw was also set for 2010.

In addition to installation subsidies the government also enforces a fixed purchase rate for electricity produced using solar technologies. Whilst the installation subsidies have been extended, the fixed sale rates have been lowered from EUR 0.45 to between EUR 0.32 - EUR 0.34 kw/h, depending on the kind of installation.

Recommended