Spaniards rebel against solar panel levy

Wed Aug 14, 2013 9:37am EDT

1 of 2. Workers remove solar panels from the roof of a building where Spanish ecological architect Inaki Alonso has his home in Madrid July 24, 2013.

Credit: Reuters/Inaki Alonso

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MADRID (Reuters) - Two weeks after Spain's government slapped a series of levies on green energy, Inaki Alonso hired two workmen to remove the solar panels he had put on his roof only six months earlier.

Alonso, an architect who specializes in ecological projects, calculated the cost of generating his own power under a new energy law and decided the numbers no longer added up.

Neither was it possible to leave the panels on his Madrid home without connecting them to the electricity grid; that would have risked an astronomical fine of between 6 million and 30 million euros ($8 million-$40 million).

"The new law makes it unviable to produce my own clean energy," Alonso said.

Spain's conservative government announced a reform of the energy system last month, including the "support levy" on solar power in a country blessed with abundant sunlight.

Imposed by decree, the reform aims to raise money for tackling a 26 billion euro debt to power producers which the state has built up over the years in regulating energy costs and prices. The solar levy was fixed at 6 euro cents per kilowatt-hour.

Under the constitution, the government can impose emergency measures by decree and has done so repeatedly since it came into office in late 2011. With Spain in economic crisis, power consumption is falling but the energy debt will continue growing by 4-5 billion euros a year unless the government takes action.

Utilities such as Iberdrola, Endesa and Gas Natural have attacked other revenue-raising measures in the reform. However, Spaniards who have generated power independently for their own homes under a system known as "autoconsumo" are among the hardest hit by policies which they say punish, rather than encourage, energy efficiency.

Industry Minister Jose Manuel Soria accepts the measures are painful but says they are needed to plug the energy deficit.

"I support 'autoconsumo' ... but the power system has infrastructure, grids that the rest of us Spaniards who are in the system have to pay for. And we pay for it through our electricity bill," said Soria.

As a decree law, the measures are unlikely to undergo much scrutiny in parliament where the ruling People's Party has an outright majority, meaning the opposition cannot force a debate.

GREEN SAVINGS CRACK-DOWN

Spain imports over 80 percent of its energy needs, spending more than 40 billion euros - or about 4.5 percent of gross domestic product - a year. Supporters of solar power says the government ought to be supporting the industry to cut this bill and achieve renewable energy targets set by the European Union.

Soria announced the measures just as home-produced solar power had become increasingly attractive compared with electricity supplied over the grid by traditional utilities.

In the past, the high cost of solar panels discouraged many consumers from taking the plunge, but prices have more than halved in the last three years. A 240-watt solar panel kit, enough to power household appliances, is now available on the Internet for as little as 500 euros.

Under the old regime, Spanish consumers could recover a typical 1,600-2,100 euro investment in solar panels through savings on their utility bills in about five years. According to FENIE, an association for solar panel installations, this will jump to 17 years when the levies are imposed under the new law.

Moreover, the law does not allow homeowners to sell electricity they do not need back to the grid, a common practice in other countries such as Germany.

Spain's climate offers huge potential for solar power. In Germany, a four-person household can cut its consumption of power from the grid by 30 percent by using panels. In Spain, which has among the highest electricity prices in Europe, the figure is three times that - offering big savings for consumers hit by the recession and 26 percent unemployment.

SOLAR REBELS

In the end, Alonso moved his solar panels to a friend's house deep in the Spanish countryside. This was far enough from the nearest mains supply to be exempt from the stipulation that panels must be hitched up to the grid.

Apart from people in isolated communities, Spaniards must connect their panels to the grid within two months. This allows their solar power production to be metered remotely - and taxed.

However, some panel owners plan to rebel by ignoring the government's deadline, confident the courts would hesitate to uphold the huge fines. These were laid down in an old 1997 energy law and, while possibly appropriate for a large corporation, no private individual could ever pay them.

"If I spend 600 euros to install solar panels and get fined 6 million euros, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL.

Courts already expect a series of legal challenges to other elements of the reforms, which investors in renewable energy says renege on the terms of their investment.

Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke civil disobedience.

"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she said.

She dismissed the idea that independent solar power producers should pay for costs such as running the grid and subsidizing other energy forms. "It's like asking cyclists to pay a levy to keep open the petrol stations they don't use," said Ribera, who served as secretary of state for the environment under the former Socialist administration.

BACKTRACKING ON RENEWABLES

Ribera said the law is a setback for Spain in the competitive renewable energy industry, where it was once a frontrunner.

It also threatens to prevent Spain from meeting an EU goal of producing 20 percent of its energy from renewable sources by 2020. "If we continue burning more coal and stop installing renewables capacity, the targets are at risk," said renewable energy advocate Mario Sanchez.

Javier Garcia Breva, chairman of Spain's renewable energy foundation, said the country had to cut its energy import bill. "Failing to support energy efficiency will only make these costs go up," he said. ($1 = 0.7523 euros)

(Additional reporting by Christopher Steitz in Frankfurt; editing by David Stamp)

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