Portugal's light-touch administrative regime for solar power companies has led Spanish businesses over the border to avoid taxes and red tape.
Spain's 'sun tax' has brought Irish developer WElink Energy, which has offices in Madrid and Barcelona, to inaugurated Europe’s largest subsidy-free solar plant - in Portugal.
WElink decided to build its 46-megawatt solar plant in the Alentejo near Ourique. this avoids Spanish red tape and a 7% tax on electrical power production.
The contracted buyer of the Ourique output is Holaluz’s whose Chief Legal Officer, Daniel Pérez Rodríguez, commented, “Next year they are planning on installing 200 megawatts in the south of Portugal."
WElink is holding off any development spending in Spain until such time as the regulatory environment chances for the better. The company has long-term plans for Iberia but at the moment is concentrating on Portugal.
Spain’s government introduced the sunshine tax on the value of electrical energy production in 2012, as a move to reduce its deficit. The government later did away with subsidies but the tax remained and is applied to new solar plants.
In Spain today, “plants don’t get a subsidy, but they all get taxed,” Pérez Rodríguez said in an interview with GreenTechMedia.
Spanish solar businesses also face national, regional and local regulations, resulting in a mass of red tape that make Portuguese bureaucracy look simple.
The contrast between Spain and Portugal is evident even in the grid connection process: if two developers are vying for the same grid connection in Portugal, the authorities put it to a draw. In Spain, it’s usually down to who has the best contacts, deepest pockets, or both.
All this hasn’t stopped Spanish developers from applying for grid connection permits but the costly setup, combined with regulatory barriers to self-consumption that can add up to five years to the break-even point for solar, means little is happening on the ground.
A surprise change in administration in June, with the Spanish Socialist Workers' Party working on a slim majority, has raised hopes that the red tape can be swept away with a PSOE pledge to improve support for renewables and wide cross-party consensus that the rules governing solar need to change.
Despite the probability of a renewable energy tax being in cluded in Portugal's 2019 State Budget, in an move to reduce electricity bills for comsumers, capacity continues to be installed in Portugal under its relatively benign framework.
