Two and a half years elapsed and about 2 billion euros were invested as Next Generation aid to promote self-consumption of solar energy. The program’s final day is December 31, and the last opportunity to request assistance lies there. Funds are distributed earlier to those who apply, but some delays have occurred as autonomous communities manage the program. In practice, the project has reached a milestone of 1,850 megawatts (MW) put into service, with 2,400 MW already supported and more than 5,000 MW under evaluation according to sources from the Ministry of Ecological Transition.
The year 2021 marked the onset of this support, financed with European funds, as solar installations began to surge. A record year in 2022 saw total installations reach 2,500 MW, with industry figures suggesting 5,200 MW for the year. A broadcast noted that the opening news helped steady wholesale prices; while the impact on the industry’s competitiveness and household bills was mixed, the growth of self-consumption and renewable energies gained momentum. Victor Marcos, who previously led the renewable energies and electricity market at IDAE, spoke about these developments during a Renewable Energy Congress organized by IDAE and APPA.
Initially, the government allocated 660 million euros, distributed according to the population of the autonomous communities responsible for final allocation. Regions could request extensions up to double that amount. Given the program’s success, additional funds were redeployed in June, with 227 million euros allocated to new support avenues and 500 million euros added as an annex to the Recovery Plan. The allocation is based on the ratio of requests received to assistance granted by those communities. These grants can save up to 600 euros per kilowatt of installed solar capacity and 490 euros per kilowatt-hour for batteries, amounting to roughly 40% of the total project cost on average.
A persistent challenge has been administrative management throughout the period. Delays of 18, 20, or even 24 months in transferring funds to beneficiaries have meant that many recipients received the subsidy after completing their projects. Some voices urged directing future hotlines to other systems. VAT deductions and tax relief were not always available because subsidies did not qualify under certain tax incentives, creating substantial slowdowns. Regional administrations faced the dual burden of complex procedures and limited human resources, while digitization lagged behind. José Donoso, UNEF’s director general, described ongoing delays as a major issue. Applicants for grants must provide documentation and meet order-based requirements. Solar company co-founder Manel Pujol noted that as long as funding exists, the process generally proceeds smoothly, but funding often runs dry before project milestones are reached.
As 2023 drew to a close, European funding winds down with more modest figures than the previous year, amid lower prices, rising interest rates, and inflation. The hoped-for boost for distribution and installation did not reach everyone, tempering expansion despite calls for sector normalization. Yet, industry insiders emphasize that subsidies remain a central driver for business viability. A representative from the sector described the subsidies as essential to the business case, helping with distribution and scale. The company estimates profitability between 18% and 22%, translating to savings of around 800 euros per year on electricity bills, with depreciation over five to seven years. The average installation cost is about 6,600 euros, with a useful life of 20 to 30 years.
Other aids exist at local and national levels to lower the upfront cost. Some municipalities offer tax bonuses on property tax (IBI), such as Barcelona, which provides a 50% reduction for three years, or Sabadell, extending to five years. A personal income tax deduction related to energy efficiency improvements also applies to solar installations, offering a 20% credit if heating or cooling demand is reduced by 7% or more; up to 40% if primary energy consumption (gas or diesel) decreases by 30%; and an elevated house energy rating to A or B. These incentives can significantly shorten payback periods.
The installation and commissioning phase typically spans four to eight weeks, after which households can begin self-consuming. In cases requiring legalization, grid injection, or bill discount mechanisms, the timeline can extend by another four to eight weeks. Industry calculations place the maximum timeline for a residential solar setup at about four months. Collective self-consumption arrangements involve longer processes. The National Markets and Competition Commission (CNMC) initiated an investigation into one major provider due to procedural hurdles, but the case did not alter the overall outcome. Authorities continue to adapt to the demand surge and strive to improve processing times for aid recipients. (Source: Ministry of Ecological Transition)