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Spain’s new Solar Feed in Tariff Policy to shift the market towards small residential installations like Germany

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Spain has been in the media spotlight for its proposed retroactive solar subsidy cuts which were strongly opposed by the Solar Industry Association in Spain.These Feed in Tariff Cuts would come on guaranteed electricity payments to solar plants installed during the Solar boom in 2007 and 2008.Pension funds and other financial investors in these renewable energy projects had also strongly criticized the Spanish government as it would lead to 100% losses for equity investors.There were also suggestions that the government would be mired in legal tangles and have trouble in raising money for Green Energy in the Future.Spain had already come to agreements over the subsidy cuts with the Solar Thermal and Wind Energy companies.There had been speculation that the Solar PV cuts would be much more harsher than those dealt out to the Solar Thermal and Wind industries.However Sanity seems to have prevailed, with the Spanish government moderating these cuts so that the returns for investors will remain more or less the same.

New FIT cuts would shift the market almost completely towards small residential installations

Smaller size solar installations typically attract higher FIT rates as the costs are higher and installed by residential owners rather than financial investors with  higher leverage.However the higher FIT has failed to move the solar market to smaller installations as financial investors prefer higher size solar plants above the 1 MW size.Spain also has very little difference in FIT rates for smaller installations unlike Germany and Italy.This has resulted in most of the solar installations in Spain to be completely be dominated by large sized ground mounted solar plants.However newer FIT rules by governments in Italy,Germany and Spain are favoring the smaller installations even more than before.In Germany almost 80% of the solar energy market has moved to plant sizes of less than 100 KW.Italy is also expected to move in this direction.Spain’s Industry Ministry is proposing to cut the existing FIT rates for new  solar PV installations by 45% for ground plants,25% for large roof installations and only 5% for small rooftop solar installations.This will ensure that most of the newer solar PV installations will be of smaller size.This is a positive move from the Spanish government as it will allow more common people to participate in the Green Energy subsidy scheme.

Spain to Cut Subsidies for New Solar Power Plants – Bloomberg

Spain is proceeding with plans to cut prices for solar power from new generators, the Industry Ministry said, after talks on broader changes to renewable energy subsidies broke down last week.Prices for power from ground-based panels may be cut by 45 percent while photovoltaic generators mounted on large roofs face a 25 percent reduction and plants on small roofs will see a 5 percent cut, the ministry said in a statement.The price cuts are included in a draft law sent to the national energy regulator for consultation.

The Spanish Banking Association estimated domestic banks have loaned 40 billion euros to renewable-energy projects. Some 600 photovoltaic plant operators may face bankruptcy if the subsidies are cut, the Photovoltaic Industry Association has said.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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