General director of the association that groups photovoltaic energy companies: «We are asking for 0% VAT on domestic self-consumption».
«There are communities that make a victim-like speech with photovoltaics. We have gone from ‘Spain is robbing us’ to ‘Madrid, Catalonia or the Basque Country are robbing us of the resource’».
A few days ago, the general director of the Spanish Photovoltaic Union (UNEF), José Donoso, presented the annual report of the main association in the photovoltaic energy sector. The data reflect that electricity production with solar energy is “at its best”, with 5.7 GW of new power installed on land in 2023, which raises the accumulated capacity to 26.1 GW and makes Spain the second country in photovoltaic generation in the EU only behind Germany.
Last year, the photovoltaic sector created more jobs than the previous year and increased its contribution to GDP than the previous year, but the UNEF also sees clouds – “challenges” – on the horizon. After the ‘boom’ in the midst of the energy crisis, self-consumption fell by 32% compared to 2022 and Donoso especially charges against the “barrier” to wholesale generation that taxes and moratoriums already represent in up to six communities. According to him, the controversy over who produces electricity on their land and where it ends up being consumed is “nationalism”, which replaces “Spain steals from us” with the complaint of communities that are large producers about the final destination of electricity.
In the report, it is surprising to see that, in a sector such as solar energy, where everything seems to be done in China, component exports from Spain increased by 10% in 2023, which links to the headache of how to make Spanish and European companies competitive against China and the US. Their commitment is more similar to the elimination of US IRA taxes than to the European idea of ??putting up trade barriers or monitoring possible anti-competitive practices in the photovoltaic or wind sector of Chinese products, which, they say, is due to much more lively competition than that in the EU.
At what point is the generation of electricity with photovoltaic energy in Spain? The broad picture is that it is at the best moment in its history, that we are contributing economic growth, generating employment but above all an economic opportunity for our country with this competitiveness that we are giving to the price of electricity with respect to the countries around us in Europe. Now, that picture should not hide from us the fact that in order to continue on this path we have some very important challenges that we have to respond to.
One of the challenges is self-consumption, which in 2023 fell by 32% compared to 2022. Have citizens gotten over the fear of high electricity prices? I always say that you should not compare a peak year, with exceptional circumstances [2022] with an average year. Energy prices are still high, not very high, but still high, not very high, but still high. Subsidies have disappeared but, in any case, in the price environment we have today it is still profitable to invest in self-consumption. In addition, inflation and interest rates are falling, the disposable income of households should increase and it should be interesting to see a sign of growth in self-consumption. In fact, in the second quarter [of 2024] we have seen a rebound.
They are asking for tax breaks to try to encourage it. How, in what way? If we want to meet the 2030 target of 19 GW of self-consumption [there are now 6.9 GW], we have to eliminate the barriers that still exist, especially collective self-consumption and energy communities and at the same time, from an economic point of view, we are not in favour of subsidies, but of tax relief. For domestic self-consumption, 0% VAT. For the industrial and service sector, on corporate tax.
He has been very forceful against the taxes that some autonomous communities are putting on photovoltaic generation under the argument that they perceive that opposing solar energy no longer takes away votes but gives them. How has it come to that?
That is what they interpret. It is a mixture of things. There are certain communities in which it is easy to make a victim discourse. What has happened in Aragon, what has been the message? Well, Spain is stealing from us has been replaced by Catalonia is stealing from us or the Basque Country is stealing from us because they steal the resource from us, that the electricity from the plant then goes to the Catalan, Basque or Madrid industry. It is a nationalist discourse. If you want to benefit your community it is not through taxes. What you have to do is create conditions that attract industry outside your territory, generating objective conditions that make it interesting, with a differentiated price for cheaper electricity. Benefiting the industry, not harming it.
He attributes this to the hidden interests against photovoltaics of winemakers, macro farms… hunters. Look, they are not spurious either, they are competitive interests. But not always face to face. They are competitors for that land. Well, then they should pay more for that land.
Speaking of the demand for distribution networks to attract companies to the territories. Do you have a figure for how many projects are waiting to be able to connect to the network? It is Red Eléctrica Española who has the data. We only know that it is a very important amount but we also know that there are people who have asked for connection points in different places to see if they are given them, for the same project they have asked in Villalpando, in Colmenar and in Getafe.
Should the Government do something else, another extraordinary modification of the network planning…? What there is is a demand procedure, which are the [network] tenders, which must be called urgently so that they are specified and those opportunities are not lost.
The UNEF report points out that trificationWe are showing that electrification is not increasing, the substitution of the use of fossil fuels for electricity. For example, the electric vehicle is not advancing. We continue using diesel or gasoline cars, they are not being replaced by electricity.
Last year Spain exported 10% of elements, products of the photovoltaic industry. What components does Spain manufacture and export? We are very competitive. Electric inverters that make the change from one power to another, we have companies that are leaders in the US market, in Australia, in the United Kingdom. It must be taken into account that our sector went through a desert crossing and those that survived went to the international market. And to survive in the international market without aid, on the contrary, you have to be very competitive. We have competitive companies in the power inverter sector, in everything that is power electronics, trackers and structure.
China is accused of cornering the entire market. What do you think about putting tariffs? I see it as a wrong measure. A tariff, depending on the sector, may make sense when you have a substitute product within your borders. When you don’t have it, you shoot yourself in the foot. You are increasing the price of a product that you have to buy anyway because that Chinese manufacturer is going to increase the price. A tariff may make sense if there is a Spanish manufacturer, but as long as there isn’t one, you are harming your competitive advantage. At this stage, what needs to be done are positive measures, subsidising and giving tax breaks to those who want to manufacture in Spain because that never fails. And leave the tariffs for the medium and long term, so that there is time to create the industry.
Do like the US with the IRA, lower or eliminate taxes, as the Draghi Report points out? Yes, yes, a very aggressive policy towards China but not towards the US. Because it is the US that is taking investments that were coming to Spain, not China.
So, the accusation that Chinese products are totally ‘doped’ with subsidies from their government…? I would say that it is an outdated view of the market situation in China. The reality is that almost 50% of the world market is in China. They have brutal economies of scale and they make a much higher investment in R&D. In Spain, in our sector, the investment in R&D is three times that of an average company, 3.6% of its turnover. In China they invest more than 15% and a very competitive environment. They have many supplier companies that they make compete to get very low prices. That is the Chinese ecosystem, it is not through subsidies. That does not mean that there is or especially has been, but today it is such a competitive environment that many Chinese manufacturers have problems surviving because they go for very tight prices and margins.
As an interest group, UNEF has worked closely with Teresa Ribera in recent years. What do you expect from her new role as Vice-President of the European Commission and responsible for Competition and Green Transition? I believe that she has two very important responsibilities and I trust that she will continue with a very clear vision that the EU must be introduced to the path of combating the climate emergency and to building the new energy model. Given her powers, she has a key role in this.
