Electric self-consumption in Spain remains under pressure. The surge of solar panels on homes and businesses peaked at historical highs in 2022 amid an energy crisis driven by soaring electricity costs and public subsidies. By 2023 the momentum clearly cooled, and in 2024 a new downward trend is underway. Industry forecasts for new solar capacity installed so far this year indicate a further slowdown, prompting renewed calls for tax relief and deeper regulatory reform to prevent another drop and to revive the sector.
In the first half of this year Spain installed just under 730 new megawatts (MW) of self-consumption capacity, according to estimates from UNEF, one of the sector’s solar power associations. They report 314 MW added in the first quarter and 413 MW in the second quarter.
The figures reveal a weakening deployment, with a 15% decline compared to the pace of installations last year (about 850 MW in the semester) and 45% less than the 2022 boom (around 1,325 MW by mid-year). Percentage changes are calculated against the average deployment rhythms of previous years, given the absence of quarterly official data and only full-year information on new self-consumption capacity available.
UNEF highlights the most positive part of this year’s trend: growth between the first and second quarters of 2024, a 41% increase. Nonetheless, the association acknowledges that these periods are not strictly comparable due to seasonal conditions, with fewer installations typically in winter due to harsher weather.
The association that groups about 800 photovoltaic companies stops short of predicting the full-year outcome but warns that at the current pace it will be difficult to meet the 2030 target of 19,000 MW of operational self-consumption capacity laid out in the National Integrated Energy and Climate Plan (PNIEC). This plan guides renewable expansion and environmental goals through the decade. In the absence of official data, the sector estimates about 7,000 MW currently operational, roughly a third of the target for six years from now. This situation fuels calls for tax relief and the removal of regulatory barriers to halt declines and boost self-consumption.
Reforms under discussion
The photovoltaic sector mobilizes to urge the government and the National Commission on Markets and Competition (CNMC) to implement tax incentives that would reactivate plant deployment. Proposed measures include substantial tax deductions for private investors, corporate tax relief for companies using self-generation, and a 0% VAT on all equipment required for solar plants, a policy already in place in several European peers.
UNEf also pushes to eliminate bureaucratic obstacles. Technical legal reforms being pursued include expanding the minimum distance needed for a plant to qualify as self-consumption from 2 to 5 kilometers; simplifying permits for projects under 500 kW; increasing the threshold for simplified administrative compensation from 150 to at least 450 kW; extending the permit-free connection to the grid to plants exporting under 15 kW beyond the current limit; and reducing grid charges for storage and for peak-demand hours.
Installers of photovoltaic plants also demand greater transparency in access and connection processes to the networks, following concerns that distribution companies favor their own affiliates over competitors. UNEF therefore calls for more information on the investment plans of large electricity companies, periodic data on available capacity at connection points to request grid connection permits, and harmonized application models across major distributors to shorten processing times and avoid burdensome information requests that slow procedures.
Two consecutive years of declines
The historic boom of self-consumption in Spain continues to retreat. The renewable sector is preparing for another drop in overall installations this year, marking two consecutive declines after the 2022 peak driven by price volatility and generous subsidies that spurred growth. Spain’s recent years have seen a historic expansion of new self-consumption facilities. In 2022, almost record-breaking levels were reached as nearly 2,650 MW of new capacity were installed, propelled by electricity price spikes and large European subsidy programs.
In 2023 the deployment remained high at around 1,700 MW (UNEF) or 1,900 MW (APPA, the renewable energy companies association). Growth began to moderate, especially for rooftop solar, due to electricity price normalization and delays in disbursing subsidies. The current slowdown trend persists. UNEF does not forecast the full-year outcome, but APPA anticipates the annual new self-consumption installations to land around 1,200 MW.
The end of the price crisis in electricity markets and occasional spikes to zero euros, along with delays in distributing European funds in some regions and the near exhaustion of budgets in others, are widely viewed as factors that will restrain the sector again.
Ending the era of large subsidies
The government has allocated 1.552 billion euros from European Recovery and Resilience Facility funds to direct subsidies for homes and businesses installing self-consumption plants. These funds have been distributed to the autonomous communities, which manage the benefit process down to the final recipient.
So far, beneficiaries have used a little over half of the allocated national budget. However, there is wide regional variation: the Basque Country has processed 84% of all submitted requests, while Extremadura has attended to about 6% to date, according to data compiled by the central administration.
Demand for subsidies has been overwhelming. Combined budgets for subsidies for self-consumption, storage behind the meter, and air conditioning and hot water total 2,005 million euros, with regional authorities receiving applications worth more than 3,363 million, per data from the Institute for Energy Diversification and Saving (IDAE), part of the Ministry for the Ecological Transition. Beneficiaries have already received about 1,092 million, roughly 54% of the total budget.
The flood of applications suggests that once these requests are resolved by regional administrations, European funds earmarked for self-consumption across homes and businesses will be exhausted. The central government has closed the door on creating new large-scale subsidy programs for generalized self-consumption, and current plans focus on subsidies for specific self-consumption configurations or targeted groups.