European countries A hyper-reduced VAT to promote energy self-consumption.

European countries, such as the United Kingdom or Germany, apply a zero rate to facilitate the installation of solar panels.

“We have a legitimate aspiration. And that aspiration is to position Spain as a benchmark for the transition towards a fully decarbonized model”. This was one of the messages left by the President of the Government in his inaugural speech at the International Renewable Energy Conference (Spirec) that was recently held in Madrid and which brought together the main leaders and think tanks in the field of renewable energy.

As noted, Spain ranks second in Europe and eighth in the world in terms of installed capacity. If there is something that our country has, it is the sun, so, with these data, it is more than obligatory that one of the main axes on which the Spanish presidency of the Council of the European Union revolves is the energy transition and the firm commitment to the implementation of self-consumption in homes and businesses.

The International Energy Agency (IEA) points out that the climate challenge that lies ahead is primarily an energy challenge. The population is aware of this. A recent CIS barometer indicates that eight out of ten Spaniards are concerned about climate change.

However, its expansion has not been enough to calm the energy crisis that we have been experiencing for a year. Exorbitant electricity bills, hundreds of cases of energy poverty, or an obsession with the cheapest light hours have caused – and continue to do so – many headaches for millions of Spaniards.

If we know of the multitude of benefits that renewable energies and self-consumption solutions for homes and businesses bring us, why hasn’t its use been widespread yet?

In many autonomous communities, such as Andalusia or the Valencian Community, for example, subsidies are applied for the installation of solar panels. However, abusing these aid models ends up being a disincentive to consumption. The uncertainty that they generate for the citizen is enormous. Many end up not hiring them because they don’t know when they will get help. The concern increases especially if these do not arrive at the time of facing the amount of the installation. In addition, the fact of betting on a subsidy model only increases administrative work, overloading an already saturated public sector that loses efficiency. We are already beginning to see the creation of new positions in the Administration for the processing of these aids, creating unnecessary costs.

On the other hand, let’s not fool ourselves: bureaucratic complexity favors the appearance of intermediary agents who end up taking a good part of the aid. To bring it to daily reality, in the case of Andalusia, a 40% reduction in the price of the installation is offered. But, after the procedures, taxes, and surcharges, the result barely amounts to a 10% final saving for the average citizen. The rest stays by the wayside.

Throughout this energy crisis, the measure most demanded by the population has been the reduction of VAT. The electricity bill itself is included in this measure until the end of 2023. But, once the end of this year arrives, it will be necessary to ask ourselves what we have done for the implementation of renewable energies and self-consumption – the real solution that will avoid us depending on the fluctuations of fossil fuels. And the answer, if everything remains the same, will be that there is still a lot to do.

If there is something that we are already short of in this energy transition, it is time. And the tax models currently implemented only emphasize this problem when four out of every ten euros of European funds are dedicated to the energy transition of the economy.

But there are measures that, if implemented tomorrow, would make it possible to receive a tax benefit for families, businesses, and institutions. A good example is the VAT reduction on the installation of solar panels.

This is a direct, simple, and clear fiscal policy that would boost the deployment of renewables and greatly reduce the time needed to start producing energy. On the other hand, it would help to channel aid to the sector, uncertainty and waiting time would be eliminated and, ultimately, hiring would be increased, which is the objective we aspire to if we want self-consumption to expand in our country and Let’s stop depending on fossil fuels.

There are countries around us that already do it. A good option would be to establish a VAT of 0%, as the United Kingdom or Germany has already done, or reduced it to 10%, as others have also applied. This is not a utopian idea, the European Commission itself already opened in 2021 the possibility of a reduced VAT of 5% to increase the use of self-consumption within the framework of its objectives of the European Green Pact. Within the sector, what was experienced at the climate summit in Egypt last November 2022 is still kicking in. The European Union itself was on the verge of abandoning it under the phrase of Frank Timmermans, vice president of the European Commission, that “it preferred not to have a agree to a bad deal.” The following stuck with me the most: “The world is watching us. And precisely for this reason, they will never forgive us if we fail them, once again, in preventing the worst.”

Leave a Comment