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?