How to get up to 70% of your solar installation costs back

Most homeowners in Spain agree that solar panels are the future.

But if you’re yet to install solar panels on your property it’s probably because of the installation costs.

So here’s a question:

How interested would you be in a solar installation if you could get 70% of installation costs back?

The above is true for many of our new clients who are on track to break even on their solar installation in as little as 3-5 years.

But it’s not the case for everyone.

I wrote this blog to better explain how tax breaks, subsidies and grants for solar panels in Spain work.

Read on to find out more!

Table of Contents

1. Can you get grants for solar panels in Spain? 
2. How much cash will I receive for my solar installation?
3. How long does it take to receive the grant?
4. What tax breaks are available for solar panel installations in Spain?
5. Can I get a reduction in my property tax payments (IBI) as well?
6. What other tax breaks and incentives are available?
7. What are the requirements?

Can you get grants for solar panels in Spain? 

The Real Decreto 477/2021 published June 2021 announced €1.3 billion in funding for homes and businesses to install solar panels, solar batteries and aerothermal units in Spain.

Funds are from the European Union and part of the NextGenerationEU recovery plan.

The current phase of funding ends on December 31st 2023.

So what exactly do the grants cover?

Programme	Beneficiaries	Installation	Grant	Deadline
Nº 1	Service businesses	Solar panels	Up to 45%	31/12/2023
Nº 2	Other businesses	Solar panels	Up to 45%	31/12/2023
Nº 3	Businesses (with an installation)	Solar batteries	Up to 65%	31/12/2023
Nº 4	Homeowners	Solar panels	Up to 600 €/kWp	31/12/2023
Nº 5	Homeowners (with an installation)	Solar batteries	Up to 450 €/kWp	31/12/2023
Nº 6	Homeowners	Thermal solar panels/ aerothermal	Up to 900 €/kWp	31/12/2023

If you want to install solar panels on your property in Spain then programmes 4-6 are the ones to look at.

First of all, the amount you can receive as a direct grant depends where you live in Spain.

In the Valencian Community where MiSolar is based homeowners with a solar installation under 10 kW will receive 600 €/kWp.

Not sure what kWp means?

KWp stands for the kilowatt ‘peak’ power output of your solar installation.

If you have 10 solar panels installed each with a maximum output of 500W then you would have a 5 kW system (10 x 0.5 kW) and therefore a kWp of 5.

Is it likely your solar installation would be under 10 kW?

If you’re a homeowner, most likely.

A 10 kW system is relatively large and would be suitable if you currently pay close to €4,000 each year in electricity bills, or wish to power a range of high-power appliances like an electric car charger, aerothermal units, pool heater, air-conditioning and so on.

What about the solar battery?

Your solar battery will be only considered valid for a grant if your property is off-grid.

In most cases MiSolar clients are installing solar panels on a property that is currently connected to mains electricity, and so we will be applying for grants according to programme Nº 4.

How much cash will I receive for my solar installation?

This question confuses many people concerning grants for solar panels in Spain.

Even if you can receive a total of 70% back on your installation cost – don’t expect be getting it as a cash sum directly in your bank account.

You will only receive the € amount you saw above relating to your installed kWp.

Let’s take the example of a 5 kW system again.

In the Valencian Community, you can receive 600 €/kWp – this would mean €600x5kWp or €3,000 total.

Note that the Valencian Community has a special +55 €/kWp incentive for anyone installing solar panels in a town with under 5,000 people – in this case for a 5 kW system you could receive €3,275.

This is the total amount you can expect to receive in cash.

The remaining incentives you can expect to receive as tax breaks and reductions on other payments which we will cover below.

Here’s an overview of the €/kWp you can receive in each of Spain’s 17 autonomous communities:

Autonomous Community	€/kWp for < 10kWp	€/kWp for 10kWp-100kWp
Andalucía	600 €/kWp	450 €/kWp
Aragón	600 €/kWp	450 €/kWp
Asturias	600 €/kWp	450 €/kWp
Canarias	600 €/kWp	350 €/kWp
Cantabria	600 €/kWp	450 €/kWp
Castilla–La Mancha	600 €/kWp	450 €/kWp
Castilla y León	600 €/kWp	350 €/kWp
Cataluña	600 €/kWp	450 €/kWp
Comunidad Valenciana	600 €/kWp	450 €/kWp
Extremadura	600 €/kWp	450 €/kWp
Galicia	600 €/kWp	450 €/kWp
Islas Baleares	600 €/kWp	450 €/kWp
La Rioja	600 €/kWp	450 €/kWp
Madrid	600 €/kWp	450 €/kWp
Murcia	600 €/kWp	450 €/kWp
Navarra	600 €/kWp	450 €/kWp
País Vasco	600 €/kWp	450 €/kWp

How long does it take to receive the grant?

Do not expect to receive the grant for your solar panel installation upfront.

You will need to pay for your installation and then wait for the grant.

There are four steps involved in this process:

1. Application
2. Resolution
3. Justification
4. Payout

The official waiting period before receiving the resolution (i.e. notification that your application has preliminary approval) is a maximum of six months.

But you don’t have to look far on online forums to find people who have been waiting 12 months or even 18 months to receive the resolution on their grant application.

If you make a mistake on your application you might be asked for further information or clarification.

NOTE – The deadline for EU funding is 31st December 2023 but so long as you make your application before this date you will still be entitled to the grant. The only exception is if funding runs out in your autonomous community. But given the success of the NextGenerationEU grants for solar a new round is expected to follow in 2024.

What tax breaks are available for solar panel installations in Spain?

You might well save more money on your annual tax return (IRPF) than you receive as a cash grant for your solar installation.

Depending on where you live, you can reduce your annual tax return by between 20-60% of your total solar installation costs (not including IVA).

The reductions apply to the following situations:

• 20% reduction – for an installation that reduces your property’s dependance on non-renewable energy for heating and cooling
• 40% reduction – for an installation that reduces your total demand of non-renewable energy
• 60% reduction – for an installation that includes rehabilitation of your home to improve the energy efficiency

Not sure how reductions work?

Let’s take an example of an installation costing €6,000 (not including IVA).

In the Valencian Community, you can only get a reduction up to 40% of your total installation cost so long as it does not exceed €8,000. So you can reduce your annual tax return by €2,400.

Depending on the kWp installed this may be more than the grant received in cash.

Can I get a reduction in my property tax (IBI) as well?

Depending on where you live, you can get a reduction between 10-50% for between 1-5 years on your IBI payments.

But certain towns have passed laws to limit the reduction if it exceeds established amounts.

Let’s take some examples.

In certain some towns near Javea there’s a maximum reduction of €200 per year for 3 years, in others there’s a 50% reduction with no limit for 3 years, and in others there’s a 25% reduction for up to 6 years.

Want to find out how much you could save on your property tax in Spain?

We created a list of the tax reductions available in the 41 towns where MiSolar installs solar panels in the region surrounding Javea.

The list includes towns like Denia, Teulada-Moraira, Benissa, Calpe, Benidorm, Altea, Pego, Oliva and more.

What other incentives are available?

You can receive a reduction between 30-95% on the construction and installations tax in Spain.

This is locally called the Impuesto sobre Construcciones, Instalaciones, y Obras or the ICIO.

It is a tax issued by your local town hall and applied to any construction or installation work that requires a licence or permit.

Some – but not all town halls – require you to apply and pay for a licencia de obra before carrying out a solar panel installation on your property.

This tax can be around 4% of the total installation cost.

But depending on the town where you live you can get a reduction of up to 95% on the tax and in some cases you don’t need to pay it all (such as in Madrid).

If you’re interested in installing solar panels in a town near to Javea – between Benidorm and Gandía – then you can find out the requirements and reductions in the download we created.

What are the requirements to receive a grant?

If you’ve already installed solar panels on your property, it’s likely too late to apply for a grant.

Why is that?

Along with your application you will be asked to supply an energy efficiency certificate for your property from before and after your solar panel installation.

The certificates prove that you have reduced your dependance on non-renewable energy.

Without them, your grant may be refused.

Here’s a list of other requirements to consider:

• Only a certified electrician can create an energy efficiency certificate in Spain
• Only a certified electrician can legalise your installation with your town hall and the authorities
• If you have other grant applications pending payment then a second application may be refused
• If you have any debts with Hacienda or Seguridad Social then your application may be refused
• Your solar installation needs to include a monitoring system (except for programme Nº 6)
• You need to show or prove that you consume at least 80% of the kWp installed on your property
• You will need to provide the installation quote along with your application
• You can only receive a reduction in your tax return for materials, equipment, labour, monitoring and control systems, removal of previous electrical systems, proposal writing, management costs – you cannot receive a reduction in your tax return for IVA (VAT), personal expenses, environmental studies, any costs for loans or fines, insurance or surveillance costs

There are a number of documents you need to provide for your application and the specific forms to fill out depend on where you live in Spain.

Be aware that if you want to make the application yourself you can expect months of extra if a mistake is made on the grant application – neither are all solar installers certified and capable of making grant applications.

MiSolar has our own in-house certified electricians.

We are fully capable of managing the application process and have provided this service to hundreds of clients in the Valencian Community in the region surrounding Javea.

Why not try our Break Even Calculator and see how much we could help you save with solar?