Tax incentives for photovoltaic power self-consumption: an analysis of the Spanish experience

Abstract

Spain has been one of the pioneer countries in the development of photovoltaic power generation. Since the very beginning of its launching, there has been a substantial involvement of public incentives in three different ways: tax incentives, direct subsidies and regulated prices for the power generated by photovoltaic investments. Due to this involvement of the public promotion in the development of photovoltaic power production, there has been a debate on what is the best way to make the increase of the photovoltaic production power compatible with the desirable neutrality of the public activity except for the necessary promotion of the environmental needs. In this regard, the treatment of self-consumption is a key issue for the faster increase in the photovoltaic facilities. Depending on how self-consumption is treated from a fiscal point of view and also for the regulated matters, like the possibility of selling electricity to third parties through the networks at a given price, the final electricity market shape will be one or another. Some are of the opinion that tax incentives for self-consumption must be avoided while others believe that a faster development of the photovoltaic technologies and productions needs a strong support of the public institutions.