Subsidy schemes for solar panels in Spain in 2023

by Lorraine Williamson
subsidy schemes

BARCELONA – Installing solar panels on your home in Spain can be expensive. However, you can significantly reduce that large investment by using subsidy schemes the Spanish government has introduced to stimulate the self-consumption of clean energy. 

Solar energy in Spain has reached more than 12,400 MW of installed capacity in 2022. This capacity, together with more than 2,500 hours of sunshine per year, makes Spain one of the areas with the greatest potential for producing clean electricity. 

The increasingly unpredictable changes in electricity prices has meant more and more people in Spain are turning towards solar energy. After all, installing solar panels can reduce their electricity bills by at least 50%. The fact that the government awards subsidies at the state, regional and municipal levels provide an additional incentive. Moreover, with solar panels, you also contribute to a more sustainable planet. 

Related post: Everything about solar panels for your home in Spain 

Since the introduction of this green energy incentive policy, some autonomous communities such as Catalonia are at the top of the ranking due to the number of self-consumption facilities that have since come into operation. This is according to data from the Catalan Institute of Energy (ICAEN). 

The English-speaking company SolarMente provides us with an overview of the subsidies available for solar panels in Spain in English. SolarMente is currently installing solar panels in the Catalonia region. However, the level of interest from other areas of the country indicates their working area will be expanded to meet this demand. Consequently, they expect to be installing solar panels in other major regions in Spain during 2023. 

The following subsidy concepts are discussed in this article: 
  • Real estate tax deduction (IBI)
  • Reduction of the load on structures, installations and works (ICIO)
  • Support for own consumption: Next Generation Funds
  • Income Tax Deduction (IRPF)
  • Regional or local subsidies

Real estate tax deduction (IBI) 

The property tax (IBI) is a municipal tax rate that property owners must pay on the value of their property. When installing solar panels on your home, you are entitled to a subsidy of up to 50% of the value of this tax. This percentage depends on the regulations set by each municipality and the type of property. This subsidy does not apply to companies or industrial buildings. 

Related post: Spain is the second country in Europe with the most solar energy 

Although it is not common, some municipalities give higher premiums and sometimes a deduction of up to 75% is achieved. However, the current quotas are not fixed. Each municipality can make necessary changes at any time, including adding restrictions in certain locations. In principle, this support is valid for several years. Each municipality sets its own term and the most common is a period of 3 to 5 years. 

However, there are exceptions to this. Some municipalities want to further stimulate solar energy and even give bonuses for 30 years. Unfortunately, on the other hand, there are municipalities that reduce the period to just one year. People in these municipalities who reduce the period to one year are less fortunate. 

This property tax deduction shortens the depreciation times of your solar installation to a greater extent than the other forms of support discussed later in this article. Therefore, it offers a significant return on the investment of the photovoltaic installation. That term decreases to 5 or 6 years at locations in the north of Spain. In the southern part of the country, where annual energy production is higher, the return on investment could be reduced to 3 years. 

Bonus tax on constructions, installations and works (ICIO) 

The ICIO is an indirect tax applicable to any construction, installation or work for which a building permit is required, whether or not this permit has been obtained. Unlike the discount on the IBI, this discount is only deductible for one year with a maximum percentage of 95% set in the regulatory framework. Again, the figure differs per municipality. 

Cogesa Expats

In Spain, 59% of municipalities with more than 10,000 inhabitants can get a discount on the ICIO. Municipalities such as Madrid, Girona or Barcelona are strongly committed to encouraging self-consumption of solar energy and offer the highest percentage. However, others, such as Ourense or Huelva, work with lower percentages. 

Whether you buy your solar panels or rent the installation this makes no difference to the above reductions on the IBI and ICIO. They apply to both modalities. If you decide to rent the installation, you can benefit from self-consumption without making an initial investment in the construction of your solar installation. Click on this link for all information about SolarMente’s solar energy subscription model. You pay a reduced monthly amount and benefit from additional services such as equipment maintenance and updates. From day one, this means savings on your energy bill, while still contributing to a greener and more sustainable planet. 

European aid for self-consumption: Next Generation Funds 

With the idea of promoting self-consumption in Spain, the European Union approved the Next Generation Funds with €1.32 billion. That money not only goes to self-consumption but also to the use of solar batteries and air conditioning based on renewable energy. Subsidies based on these funds can be applied for until 31 December 2023. 

Depending on the type of installation and the power of the system, these are the established amounts for a single-family home in Spain: 

  • Subsidies of €600 per kWp for installations with a capacity of less than 10 kWp (most common) and €490 on the battery.
  • Compensations between €300-€450 per installed kWp for systems with a capacity of more than 10 kWp.
  • Municipalities with less than 20,000 inhabitants on non-urban land and 5,000 on urban land also receive extra support of €55 per kWp in the system and €15 on the battery.

Income tax deduction (IRPF) for installing solar panels 

Another interesting subsidy that stimulates the use of solar energy for self-consumption in Spain is the income tax deduction. Each year, a multitude of drafts can be deducted from your taxable income. However, many people do not know that the costs of installing solar panels can also form a deduction. 

The percentages are as follows: 
  • Up to 20% of the investment with a maximum of €5,000 per year. You can deduct this amount just by installing solar panels on your roof.
  • Up to 40% if, in addition to meeting the previous point, an energy saving of 30% is achieved compared to non-renewable sources in the home or if they achieve the highest energy efficiency classes (A or B). The maximum amount that can be deducted is €7,500 per year.
  • 60% of the investment is reduced if the use of non-renewable energy sources is reduced to 30%. Or in case the house in a building for residential use qualifies for energy efficiency class A or B after installation.

Note: Not all Autonomous Communities allow the IRPF bonus. Therefore, It is best to inquire about this at your town hall. However, access to this deduction means that you must meet a series of requirements from the tax authorities: 

  • The applicant must be listed as the homeowner
  • Photovoltaic installations must be carried out by recognized installers

In summary, the bonus in income tax is another factor to add to the reduction in investment, although the percentages here vary by geographical area in Spain too. 

Specific assistance from the Autonomous Communities 

Finally, there is specific regional support for the installation of solar panels, often specifically announced by the relevant federal governments. This makes it more difficult to benefit from these municipal premiums. Moreover, not all town halls offer this form of assistance. 

For example, the Autonomous Community of Navarre offers a maximum deduction of 30% to legal and natural persons. Cities like Madrid support self-consumption with a subsidy of up to 25%. However, these forms of support should not be presented as a panacea for subsidies. The concept does not greatly reduce investment. Instead, the IBI offers better bonuses for your solar installation. 

Solar energy is more accessible for all homes with Various subsidies 

With the Spanish regulatory framework mentioned above, the government supports the development of self-consumption of photovoltaic energy. The various subsidies for solar panels aim to make solar energy an accessible source for all homes. This reduces energy dependence on fossil fuels and reduces our electricity bill by 50%.  

Leave the sharply changing electricity prices behind and produce sustainable energy through your solar panels in Spain. Find out how much you can save each month while committing to a more sustainable world with SolarMente’s self-consumption calculator. 

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