The following includes a brief description of certain tax incentives that have not been specifically created for the renewable energies sector. Careful tax planning is therefore required to take advantage of these tax incentives.
Reduction of income from certain intangible assets
The income derived from the license of the right to use or exploit certain intangible assets as defined in article 23 of CIT Law, shall be included in the CIT taxable base with a 50 percent reduction, and provided certain requirements are met. This 50 percent reduction shall not be applicable for the tax period following that when the total income derived of the license of each intangible asset that has benefited from the reduction, calculated from the date on which the license is issued exceeds six times the cost of the intangible created.
Corporate Income Tax (CIT) credit for investments in assets to protect the environment
Article 39 of the Spanish CIT supports investments in fixed assets aimed to protect the environment, including facilities designed to avoid atmospheric or acoustic pollution from industrial installations, or water pollution. An eight percent tax credit is granted for any investment included in programs, arrangements or agreements entered with the environmental public authorities of regional governments.
Tax credits may be carried forward to the following tax year if they have not been applied in a given fiscal year and have not been used in that fiscal year because the tax due was insufficient.
R&D Corporate Income Tax credits
R&D tax credits: The tax credit base shall consist of the amount of research and development expenses and, if applicable, investments in tangible fixed assets and intangible assets, excluding real estate and land.
Tax credit rates are set at 30 percent of the expenses incurred in the tax period for this purpose. In the event that the expenses incurred in pursuing the R&D activities in the tax period exceed the average of those incurred in the two preceding years, the rate established in the preceding paragraph shall apply up to that average, and 50 percent to the amount by which that average is exceeded.
Technological innovation activities tax credits: The tax credit base shall consist of the amount of the expenses incurred in the technological innovation activities. The tax credit rate is 15 or 10 percent, depending on the nature of the activities.
Capital duty exemption
As a result of the modifications introduced by RD 13/2010, Spanish Transfer Tax Law foresees an exemption of the Capital Duty regarding:
- incorporation of companies
- share capital increase
- contributions of shareholders that do not constitute a share capital increase
- transfer to Spain of the office of effective management of a company not previously located in the EU.
Tax allowances on local taxes
For certain local taxes such as construction and urban canon, tax allowances could be determined at the local level. These tax allowances would depend on each local authority, and should be negotiated on a case-by-case basis.
New taxes on energy
New taxes on electricity generation
Law 15/2012 entered into force on 1 January 2013. These taxes are not strictly environmental taxes. Revenues created by them will finance the Spanish deficit for the cost of generation and distribution of electricity. Taxes apply to:
- electricity generation
- nuclear raw and radioactive waste
- nuclear raw and radioactive waste storage
- use of continental waters to generate electricity (hydroelectricity generation).
Law 15/2012 has also established that the electrical energy attributable to the use of fuels in facilities that use any of the non-consumable renewable energies as primary energy shall not be subject to a premium-based economic regulation. This affects solar-thermal installations in particular.
Applicable for solar, wind, geothermal, hydro, combined heat and power (CHP) systems and biomaterials under 50 MW of installed capacity.
Fixed remuneration is available for electricity produced by power plants.
Spot price with a fixed premium (fixed with an overall cap and floor, depending on technology). The option of spot price plus premium has been eliminated by Royal Decree-Law 2/2013.
General regulation of the legal regime of electricity production from renewable sources is contained in RD 661/2007. As per operating subsidies for renewable energy (except photovoltaic or PV), they are determined by RD 661/2007 governing renewable technologies. Solar PV technology incentives for the plants entering in the system after September 2008 are specifically governed by RD 1578/2008 and refer only to feed-in tariffs.
Until January 2012, incentives for new renewable plants were granted, provided that projects were filed with the “registry for pre-allocation,” subject to limitations on the total capacity defined.
However, all incentives granted to new renewable plants that are not yet included in the registry of pre-allocation (for instance, those wind power plants envisaged to enter after 1 January 2013) are currently suspended by the RD-L 1/2012. The registry of pre-allocation has been cancelled as well, leaving open the establishment of new special economic regimes for certain installations and the right to receive a specific economic system under certain assumptions.
Prior to this RD-L 1/2012, relevant regulatory changes have been recently introduced by RD 1614/2010, RD 1565/2010 and RD-Law 14/2010. Mainly focused on wind, solar PV and solar thermal energy production, these changes concern existing power plants or those under construction. Some of the legal changes substantially modify the legal regime (both economic and operational) of these plants.
The following sections provide an outline of some of these changes.
Wind and solar thermal technologies (RD 1614/2010)
- Operational hourly limits that are entitled for feed-in tariffs and premiums:
- For wind, a number of hours for all the plants under this technology are established (2,589 hours per year),; provided that an overall average of production hours for total installed wind power is reached (2,350 hours per year).
- For solar, the hourly limits are considered individually and depend on technology, as follows:
Once exceeding such limitations, pool prices should apply.
- A review of incentives granted by RD 661/2007 includes the following:
- For wind technology, in terms of the feed-in tariff, the amount to be applied will be the ones set under regulation Order ITC/3519/2009.
Furthermore, RD 1614/2010 clarified that the revisions of premiums, caps and floors mentioned at article 44.3 of RD 661/2007 shall not affect those wind and SCP Plants included in the pre-register.
As with solar thermal, during the 12 month period after the start up of these plants, the energy produced will have to be sold to the market mandatorily under feed-in tariffs. Furthermore, a time extension is granted for the start up of solar thermal plants filed in the Incentives’ Registry under phase 4 (until 31 December 2013).
|Parabolic cylinder without storage capacity
|Parabolic cylinder with storage capacity of 9 hours (h)
|Parabolic cylinder with storage capacity of 7 h
|Parabolic cylinder with storage capacity of 4 h
|Saturated steam tower
|Salt tower with 15 h storage capacity
Solar PV technology (RD 1565/2010 and RD-Law 14/2010)
- Operational hourly limitation with the right to be granted feed-in tariffs, depending on tracking technology and individual considerations. In this regard, a two-stage limitation is expected.
- A general hourly limitation for all PV plants is approved with the following conditions, with Spain divided into five irradiation areas:
- For those PV plants under RD 661/2007 economic regime, a special and extraordinary limitation has been approved until 31 December 2013:
- As compensation for the hourly limitation set out above, feed-in tariffs are extended from 25 to 30 years.New relevant technical obligations are established for PV plants to permit a global technical management of the grid.
Decrease of the feed-in tariffs established under RD 1578/2008 with the Incentives Registry (RD 1565/2010):
- 5 percent decrease for type I1 installation
- 25 percent decrease for type I2 installations
- 45 percent decrease for type II installations.
|Hourly limitation per year|
|Single axis tracker
|Dual axis tracker
|Single axis tracker
|Dual axis tracker
Cancellation of the registry of pre-allocation of new special regime installations (RD-Law 1/2012)
- Due to the deficit problem generated by the Spanish electrical system, and based on a possible excess of renewable capacity considering the objectives of 2020, the government has decided to temporarily suspend the registration of new special-regime plants along with the special regime of incentives for these plants. As a result, developers who wish to construct new plants in this situation will not receive incentives but only the market price.
- This new policy change will apply only for those special-regime facilities that would not have been entered in the registry of pre-allocation according to RD-Law 6/2009 and RD 1578/2008 for PV technologies. This change was made with the intention of avoiding the retroactive character of the measure.
- Feed-in tariffs, premiums and limits laid down are cancelled for new plants, as well as the supplement for efficiency and reactive energy.
- Additionally, Royal Decree-Law 29/2012 of 28 December 2012 established that the economic regime of incentives applicable to renewable producers of the special regime will be cancelled if an installation registered in the pre-allocation registry has not been completed by the deadline for definitive registration in the registry of special regime production installations and has started to sell energy.
Measures introduced by Royal Decree-Law 2/2013 of 1 February 2013
This regulation, which seeks to reduce the costs of the Spanish electrical system, has established the following measures:
- Replacement of the Consumer Price Index (CPI) with the CPI at constant tax rates (excluding unprocessed food and energy products). This measure is designed to update the remuneration of those technologies referenced in this index.
- Cancellation of the premium established for renewable installations that sell their energy to the market. In this sense, RD 661/2007 has been modified and now establishes that the value of the premium applicable to all groups and sub-groups shall be EUR0.0/kWh.
- Renewable generators do not have the choice to opt between market price plus premium and feed-in tariffs. By contrast, all renewable generators have to be subject to feed-in tariffs unless they choose to sell at market price without premium.
Considerations regarding operating subsidies for renewables:
Duration: Subsidies are granted from 15 to 25 years. Depending on the technology, subsidies are substantially reduced after this period.
Update: Subsidies are updated annually according to the CPI at constant tax rates excluding unprocessed food and energy products.
Payment: Part of the total subsidies amount is liquidated by the Spanish National Energy Commission (Comisión Nacional de Energía or CNE) and paid by the energy distributors. The remainder is liquidated and paid by the market and system operator.
Administrative procedures: Main permits and authorizations include electric sector authorizations, municipal permits and licenses, and environmental procedures. At an environmental level, it should be emphasized that public tenders are carried out for onshore wind and PV projects to determine locations that are environmentally friendly. As per offshore wind, a national map has been approved with possible project locations.
Grid access: Access priority is given over other non renewable electricity producers. Full access is not guaranteed but depends on the technical management of the grid and demand. The costs concerning the access to the grid will be paid by the energy producers. Access to the grid will only be denied by grid operators in the case of a lack of capacity according to security, quality supply and regularity criteria.