To protect entrenched oligopolies, Spain’s government makes it almost impossible for small businesses and households to generate their own solar power.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
If there’s one thing we should have learnt from this extended period of post-crisis drudgery, it is that there is no limit to how far our elected governments will go to protect the interests and privileges of oligarchs and oligopolies. In Spain, the government will even steal the sun’s rays to protect the country’s energy plutocracy.
Now the Spanish government is planning to tax homes that produce their own energy through solar power and store some of it using batteries. El País reports:
A draft decree prepared by the Industry, Energy and Tourism Ministry establishes a new fee to discourage the use of batteries or other storage systems by people who produce electricity, with solar or photovoltaic panels for instance, and who are connected to the national power grid.
This latest royal decree follows on the heels of an earlier one announced in 2013 that levied a tax solely on those who generate their own electricity. Once passed into law, intrepid small-time energy producers will be forced to pay a backup toll for the power from their solar panels, in addition to the access toll paid by everyone who consumes electricity from the conventional grid.
What’s worse, in order to figure out who is producing what level of energy (and, of course, how much to tax it), all solar panels would have to be hooked up to the grid. Energy producers who don’t connect to the grid could face a fine of up to 30 million euros (yes, seven zeros!). As Forbes reports, the intention is clear: to scare taxpayers into connecting to the grid in order to be taxed:
The tax will make it economically unfeasible for residents to produce their own energy: it will be cheaper to keep buying energy from current providers. And that is exactly the point.
As for the latest decree, its purpose is to discourage households and businesses from storing surplus energy. Under the new rules, consumers will not be able to use products such as Tesla’s Powerwall battery and will also be penalized for using the storage systems that come included with the latest generation of solar panels.
Result: just about all forms of energy self-production will be made unprofitable. Only totally off-grid consumers who have their own completely independent energy-production systems will be able to use batteries without being penalized for it. Even this option is unfeasible since modern storage devices typically have an autonomy of just two hours or so, making it almost impossible to be entirely self-reliant.
Plugging a Hole
All of this is necessary, claims the government, in order to plug a €26 billion accumulated tariff deficit – the gap between energy production costs and what end consumers pay for power.
According to the government’s version of events, the root cause of this deficit was the vast surplus energy being produced during Spain’s golden era of solar energy production, which all came to a grinding halt with the Rajoy government’s blanket withdrawal of subsidies and imposition of the so-called Sun Tax. At one point Spain was generating so much solar power, thanks largely to generous state subsidies and falling prices, that production capacity exceeded demand by more than 60%!
According to other sources, the government’s main motive for taxing Spain’s smalltime sunlight gatherers was to coddle and protect Spain’s energy oligopolies – Gas Natural, Endesa (now owned by Italy’s energy giant Enel), Red Electrica de España, Union Fenosa, Iberdrola and Repsol – from the threat posed by fair competition.
The energy sector in Spain is a huge lobbying force. In recent decades these six companies have provided lucrative board positions to dozens of influential former politicians (see this slideshare), including two former prime ministers, Felipe Gonzalez (Gas Natural), and José María Aznar (Endesa), the current Minister of the Economy Luis de Guindos (Endesa), the former Secretary of State for the Economy Guillermo de la Dehesa (Union Fenosa) and former government Vice President Narcís Serra I Serra (Gas Natural).
The Real Threat
Hence, Spain’s energy giants invariably get what they want. And with the price of solar panels decreasing by roughly 80% per year, and more and more households and businesses investing in the enticing prospect of energy independence, something needed to be done. If more and more people continued to produce their own energy, it was only a matter of time before the trend reached a tipping point.
The problem was not so much the type of energy being generated – Spain already boasts the world’s largest solar power plant and is the fourth largest producer of solar energy – but rather who was generating it. Essentially, this is all about control and preserving a heavily centralized, oligopolistic business model. As long as companies like Endesa, Iberdrola and Gas Natural continue to control each entry and exit point along Spain’s energy stream, their dominance remains unchallenged and energy consumers remain hostage to their every whim, including, of course, price hikes: Spain is currently the fourth most expensive country in Europe for electricity.
As countless small businesses and households, duped by the former government’s promises of energy independence and sustainability, are left with investments that have now lost much of their practical value, Spain grows more dependent for its energy needs on Algeria, from whom it currently gets more than 50% of its natural gas – hardly the most secure source in the current geopolitical context.
But for Rajoy’s government and the entrenched oligopolies it coddles, dealing with empowered consumers in a fast-evolving market place is a much graver risk than dealing with the regime in one of the world’s most unstable regions. By Don Quijones, Raging Bull-Shit.
Spanish governments have a special relationship with big corporate entities. And Goldman’s deal was the mother of all gift horses. But it’s about to topple. Read… Is Goldman About To Lose A Tentacle?
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It’s yin and yang. I am sure a companion piece will be written in the future titled: The people who allow the sun to be stolen.
Is Game of Thrones available in Spain?
Yet another example of the true motives of government enslaving their populations to the dependency on the centrally controlled grid. Every time people figure out a new way toward independent action the bureaucracy makes new rules on a whim to corral it off. And this one is doubly insidious as they subsidized the activity in the first place. The most dangerous sentence in existence is ‘we’re from the government and we want to help you’. The only proper response is ‘laissez vou faire’ – leave us alone!
Given that those homes used massive subsidies to get those solar panels it’s only fair they pay some of it back.
Here’s what they should do…
Tear out the solar panels and put in portable electric generators that run on bio-diesel. Make the bio-diesel from leftover cooking oils. At least until the gov’t outlaws that too…
I see the Candle-Makers are at it again.
“We are suffering from the intolerable competition of a foreign rival, placed, it would seem, in a condition so far superior to ours for the production of light that he absolutely inundates our national market with it at a price fabulously reduced. The moment he shows himself, our trade leaves us — all consumers apply to him; and a branch of native industry, having countless ramifications, is all at once rendered completely stagnant. This rival, who is none other than the sun, wages war mercilessly against us, and we suspect that he has been raised up by perfidious Albion (good policy nowadays), inasmuch as he displays toward that haughty island a circumspection with which he dispenses in our case.
What we pray for is that it may please you to pass a law ordering the shutting up of all windows, skylights, dormer-windows, outside and inside shutters, curtains, blinds, bull’s-eyes; in a word, of all openings, holes, chinks, clefts, and fissures, by or through which the light of the sun has been in use to enter houses, to the prejudice of the meritorious manufactures with which we flatter ourselves that we have accommodated our country — a country that, in gratitude, ought not to abandon us now to a strife so unequal.”
From Bastiat’s Petition of the Candle-Makers, 1845. full text at http://bastiat.org/en/petition.html
I live in the Sunshine State, Florida, where there are practically no solar panels anywhere. The power company claims they have a solar farm somewhere and are promoting solar but it ain’t true. Most localities have ordinances against solar panels on the house or property. No doubt a policy promoted by former Gov. Jeb Bush, who comes from a family with oil interests.
The amount of energy that could be generated here from solar would be tremendous. This policy of restricting solar energy benefits the oil interest which are not even from our state. The lack of consideration shown to the citizens is mind boggling.
Obviously someone has a good lobby in FL. Interestingly, I saw one story where Cape Coral told a resident her solar panels were illegal because she was off-grid, and the International Property Code (http://publicecodes.cyberregs.com/icod/ipmc/index.htm) said all homes must be hooked up to public utilities.
Now, I don’t know if that’s true of not, but if we pass ObamaTrade that could easily be the case. Or perhaps we’d all have to install solar panels whether we want them or not.
Yes, I think recently some woman was cited for being off the grid. It’s illegal in Florida not to have utilities in the house. In any case, Florida is the most natural place to expand solar use. I think it should be required that every new home have some solar power, even if it is just for heating the water which already comes out of the faucet warm.
Petunia, you’re substituting one government intrusion for another. Instead of forcing them partially onto the grid you want to force them partially off.
I say stop subsidizing energy in any form and let people choose what they want to do. When the total cost of public electricity is higher than solar, people will switch to solar.
Subsidies only work as a redistribution from one group to another. When you subsidize solar for one house, you force all the other taxpayers to foot the bill. If you want a solar house go for it, but don’t make me pay for it.
How about people starting to leave Florida? Nasty state.
There’s plenty of solar panels going up here in Nevada, which I’d argue is an even better choice than Florida with it’s 360 days of sunshine per year…if they could perfect storage and build basements to lesson the need for air conditioning, this would be the perfect state. The problem here is a lot of the solar has been co-opted by for-profit middlemen who work in synergy with traditional utilities. You don’t even own the solar panels–you lease them for 20 years. Those types of programs don’t bother the utilities…
Welcome to the world of solar electricity.
I have panels on my roof and they have been there for about 6 years. I also have a NG boosted solar hot water system.
I could make lots of comments about both, but I’ll try and keep it short.
Years go the federal Labor government and the state Labor government enacted a whole bunch of ‘green’ energy programs. All of them had a subsidy of one kind or another.
For example, if you didn’t have insulation in your roof, the government would pay for some or all of it (I can’t remember all the details…). Well like a fool I had already put it in my roof with my own money after I bought the house. Strike one.
If you already had roof insulation, but had an electric water heater the government would pay part of the cost to change to a NG water heater. Oops, I already had gas. Strike two. (We wanted to get one of those nifty NG instant hot water systems as we had one when lived in Japan, but the cost was way too high.)
So they had a third option if you didn’t qualify for the above two: put in a gas boosted solar hot system. We needed to get a bigger system as the kid always used up all the hot water.
Luckily we waited and qualified for the third option which allowed us to put in the instant hot water system, a larger tank (twice the size of the previous one), and the solar hot water panels on the roof for the same price as it would ahe cost just for buying the instant hot water system.
IMO one of the best investments I’ve ever made. In summer our bill for NG consumption is around $7.50 per month. Our supply charge is much more than that. It evens helps in the other months as well.
As far as solar electricity is concerned there are both federal and state regulations that cover the installation and use. It is different for each state.
The federal government provides a subsidy based on where you live and the size of the installation. The state governments set the amount that the utilities have to pay you for excess electricity generation.
Here in Victoria the rate started out at 60 cents per kWh (Premium feed in tariff (PFIT) , was moved to 35 cents (FIT), then IIRC to 28 cents and is now 6.2 cents for all new installations.
Once you ‘go solar’ here in Victoria you had to put in a smart meter at your own cost and most utilities require that you go on a Time of use (TOU) rate schedule, and a solar electricity rate schedule as well.
The smart meter cost is now meaningless as all people should be one one now. (Really great these smart meters: you have to pay to get one installed, you rent it from the utility, and the meter readers end up as being unemployed!!!)
The TOU schedule is divided into two basic times: peak and off peak. Peak is from 7:00 am to 11:00 pm Monday to Friday. All other times are off peak. Peak rates are roughly twice peak rates.
(As an aside electricity prices here have gone up over 100% since I put up my panels and the off peak rate is more than peak rate used to be!!!)
For having panels you also get to go on the solar electricity rate schedule which means that you pay about 10% MORE than others without panels.
Now for the kicker………….
The current rate per kWh is about 36 cents for those with panels. Those on the PFIT get 60 cents per excess unit generated. Others get the current FIT which is 6.2 cents.
That’s right if you put in panels and only get the FIT you pay some 36 cents per kWh for your usage, but only 6.2 cents for production…..
This rate was set by a ‘panel’ made up of ‘industry’ reps and the government. Way to go. It now only makes any ‘cents’ to put in panels if you are big user of electricity during the day.
Excess production is interesting as well. Production and usage is measured in 30 minute intervals. For example, if during one 30 minute period you use 3 kWhs and produce 1.5 kWhs the utility would charge you for using 1.5 kWh at 36 cents per unit or 54 cents.
In the nex 30 minute period you don’t use any electricity and produce that 1.5 kWhs the utility would pay you for the following:
at a PFIT rate: 60 cents x 1.5 units or 90 cents
at FIT rate: 6.2 cents x 1.5 units or 9.3 cents.
For the two periods the PFIT would be getting a credit of 36 cents and the FIT a bill of about 45 cents………………A completly different result.
Added to both bills would be the daily supply charge just for being hooked up to the grid. Right now that is about a $1.35 or so per day.
We really get ripped for electricity here in Oz.
Amazing story and stats! Thanks!
I think Spain clearly stole this idea from Matt Groening! Watch the clip… http://www.criticalcommons.org/Members/AdrianFohr/clips/the-candle-makers-petition
Presently, the levelised cost of PV electricity in Spain is under 0.06 €/kWh. Even using a cumbersome storage system such as the Tesla power wall this value will not go over 0.12 €/kWh. No utility in Europe can possibly compete with such prices:
What is happening in Spain is clear for everyone to see. There are many narratives protecting the oligopoly: the tariff deficit, excessive power supply, even EROEI. But numbers do not lie.
Folk willing to understand what is going on should look into what is happening in Portugal, where instead of taxing solar irradiation what is coming on the table is the usage of the grid as storage medium for self-consumption systems.