Review of the Legislative Framework for the Remuneration of Photovoltaic Production in Spain: A Case Study

Abstract

Spain is among the European countries with the greatest photovoltaic potential. During the first decade of the 2000s, Spain was a European leader in installed photovoltaic power and job creation in the renewable energy sector, strongly influenced by a very favorable regulatory framework and public subsidies at a time of economic growth. That situation would be completely reversed with the regulatory changes introduced in 2012 to combat the tariff deficit and the instability in the electricity supply system, problems accentuated by the economic crisis. The main objective of this study is to present an exhaustive review of the legislative changes that have affected photovoltaic energy in Spain. Using real data on electricity production and the remuneration of a typical photovoltaic plant, we show that there was a very significant fall in the economic returns that investors had come to expect, within a system that prioritized, first and foremost, the initial investment rather than the levels of electricity production. The changes to the legislative framework affecting a typical 100 kWp photovoltaic (PV) facility that entered into service before 2007 provoked a significant decrease of 8.7% in expected revenues, calculated from real data of production and income. These economic losses can be even higher, with a drop in revenue of almost 25% if the entire period of the installation’s useful life is analyzed. Public support for renewable energy is important for its introduction into the electricity market, but so is regulatory stability that offers investment security and predictability for maintaining investment and development in the renewable energy sector.