Spain stands at the forefront of a historic shift toward self-consumption in electricity. After 2022, when photovoltaic self-consumption surged to record levels, the previous excitement cooled as electricity prices eased and subsidies lagged. The government is now reigniting interest in solar power, with targeted measures that encourage large self-consumption facilities for businesses and industry.
The executive used the omnibus decree on emergency economic measures approved recently to widen tax incentives for companies deploying large self-consumption facilities and to simplify the installation of self-generating solar plants. The reforms also streamline grid connections, addressing a key bottleneck in expanding solar capacity.
More network capacity
The Ministry for the Ecological Transition, led by Vice President Teresa Ribera, will earmark 10 percent of the capacity in tenders granting access to both the transmission and distribution networks for self-consumption projects. This includes the high voltage network of Spain and, in some cases, distribution networks managed by major groups such as Endesa, Iberdrola, Naturgy and EDP.
Government action also aims to prevent unwanted or speculative projects while expanding access to the grid. Through the new legal reforms, along with measures enacted during the height of the energy crisis, part of the tendered electricity will be reserved for grid-connection contests. This approach extends to future auctions, with the government noting that the reform will accelerate self-consumption projects in companies more than in homes, reflecting the notable slowdown observed in the industrial segment last year.
The goal is rapid progress. To that end, viability conditions for grid connections are being tightened for the next two years. During this period, any unallocated connection capacity will be redistributed to eligible projects, whether for self-consumption or other purposes, without restrictive conditions.
Access to grid connection permits in Spain has grown valuable in recent years due to the surge in renewable plants and large industrial projects with high energy demand. These permits have become highly sought after, sometimes fueling sales and speculative activity in the market.
To avoid regional saturation from the concentration of new renewables and large projects, the government has begun an urgent expansion of electricity networks and is preparing a comprehensive planning effort for the coming years to meet evolving needs. In this context, allocating at least 10 percent of all network access auctions to self-consumption becomes an important tool to support expansion, especially for corporate and large industrial projects.
Huge gap in self-consumption where 300 million euros of electricity are at risk
Tax incentives
The government also intends to boost corporate self-consumption through tax incentives. The omnibus decree extends for another year the option to depreciate investments in renewable energy facilities used for self-consumption and other renewables that replace fossil fuels in corporate tax. The objective is to encourage using renewables to displace fossil energy, strengthen national energy security, and bolster the competitiveness of Spanish companies, according to the authorities.
The depreciation rate relief, which expired at the end of 2023, has been extended to investments started or completed in 2024. The maximum deductible amount is 500,000 euros, and the incentive is conditional on maintaining the prior year’s average workforce for two years.