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Rooftop solar fever cools in sunny Spain

Rooftop solar fever cools in sunny Spain

Wednesday, February 21, 2024, 16:31 GMT+7
Rooftop solar fever cools in sunny Spain
Solar panels are seen on the roof of a home in Ronda, Spain February 7, 2024. Photo: Reuters

MADRID - The number of Spaniards installing solar panels on their homes fell last year, the first decline since 2018 as the impact of subsidies faded, while the outlook for this year is steady.

Analysts said lower energy prices and the squeeze on household budgets caused by inflation had begun to sap enthusiasm for solar across Europe, but the impact is particularly marked in Spain, a relatively immature market for rooftop solar.

Almost 112,000 Spanish households set up solar energy installations in 2023, roughly half the record level of 2022, according to renewable lobby APPA.

Solar panels are seen on the roof of a home in Ronda, Spain February 5, 2024. Photo: Reuters

Solar panels are seen on the roof of a home in Ronda, Spain February 5, 2024. Photo: Reuters

Solar panels are seen on the roof of a home in Ronda, Spain February 7, 2024. Photo: Reuters

Solar panels are seen on the roof of a home in Ronda, Spain February 7, 2024. Photo: Reuters

Although one of Europe's sunniest countries and a leader in renewable energy, Spain lags other countries in this segment, notably Europe's solar leader Germany.

It began to catch up after Spain in 2018 scrapped an unpopular levy, known as the sun tax, as part of measures to reduce electricity bills. The charge on solar power affected households and small businesses.

Christophe Lits, a market analyst at European industry association SolarPower Europe, said demand had fallen especially sharply in Spain because the market was less mature and would "fluctuate more due to external shocks".

Madrid earmarked more than 2 billion euros ($2.16 billion) of European Union post-pandemic recovery funds for solar installations, energy storage and domestic renewable heating systems. In addition, many local authorities offer solar panel tax breaks.

"We had in 2022 a market doped with subsidies, the war in Ukraine and market instability," Javier Dominguez, technical director at Spanish renewable energy systems firm Cambio Energetico said. "In 2023 there was a hangover from that."

Lucia Varela, director of self-consumption and energy communities at solar industry group UNEF, said a decline in demand from households had been expected when people stopped perceiving energy prices as high as they did during the price shock of 2022 caused by the market disruption linked to Russia's attack on Ukraine.

For the industry, however, she said the extent of the decline in installations on people's homes was concerning and it may have to look more to new forms of installations, serving groups of households or communities.

The industrial sector also installed less solar in 2023, though the decline was smaller. Overall, some 1.9 gigawatts (GW) of capacity was added, 27% less than in 2022 but well above the 2021 performance, APPA figures show.

Solar panels are seen on the roof of a home in Ronda, Spain February 7, 2024. Photo: Reuters

Solar panels are seen on the roof of a home in Ronda, Spain February 7, 2024. Photo: Reuters

Playing catch up

Spain's total installed solar rooftop capacity at the end of last year was a fifth of Germany's and roughly half of Italy's, SolarPower Europe data shows.

"The sector is 15 years behind due to the sun tax," Christopher Cederskog, chief executive of solar supplier Sunhero, said.

He also said delays in subsidy payments had damaged public perception of the sector.

The danger is, he said, that the poorest who would benefit most from cheaper energy, feel unable to risk the initial outlay.

An average domestic system costs around 7,000 euros, according to APPA. Based on last year's energy prices, such investment would be recovered in seven years' time even without government support.

Average waiting times for subsidies are around a year, Varela of UNEF estimated, and in some cases closer to two.

The energy ministry transfers funds to the regional governments to implement the scheme, which must comply with rigorous European Commission rules, a spokesperson said, adding about 44% of the allocated funds have been disbursed.

Maria Diaz Fernandez, a 43-year-old primary school teacher, spent around 6,400 euros installing 10 solar panels on her home in Toledo, central Spain, in November. She said she is waiting for the subsidies that she hoped would cover 40% of the cost.

Her siblings, who installed their systems almost a year earlier, were also still waiting.

 

Bright future?

The energy ministry spokesperson, however, said the government's track record on solar was strong as it not only cancelled the sun tax, but had improved the regulatory framework, adding the market had grown 14-fold since 2018.

Jon Macias, president of APPA's prosumer branch, was also upbeat, citing Spain's continued potential for growth as only seven percent of single-family homes and two percent of businesses in Spain get their energy from their own solar panels.

He predicts installations this year will be steady with last year's and said Spain was on track to reach a 2030 target of 19 gigawatts (GW) of installations on homes and company-owned buildings. The goal would correspond to fitting solar panels to more than 4 million average homes.

Some, however, say change is needed to ensure Spain carries on installing solar panels.

With roughly two-thirds of Spaniards living in apartment blocks, many in the sector say the future lies in shared projects, in which solar panels would provide energy to group of consumers rather than a single household.

Such installations account for 1% of the market and face challenges, not least cultural ones.

"Spaniards are used to consuming energy, not producing it, Eugenio Garcia-Calderon, cofounder of solar energy company Comunidad Solar, said.

($1 = 0.9240 euros)

Reuters

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