1. The experience of Spain on PV incentives
Valerio Ferro, Marketing Manager, BP Solar
Rome, 8th of March 2004
Thank you….
I’d like to start by introducing you to BP and illustrating why the solar market is an important one for us Solar is part of a consistent business strategy for BP.
Our view of the future of the Solar Market

2. Annual market volume
Estimated

3. Annual market volume Germany Spain
At the end of 2002 only 19% (21MW) of the 2006 plan was achieved. Plan for 2006= 61,2 MW Plan 2010=135MW
Germany
Spain

4. Subsidies available in Spain
Feed-in tariff
€ 0,39/kWh for systems < 5kW AC
€ 0,22/kWh for systems > 5kW AC
10% fiscal deduction on the system cost
Capital subsidies available at a regional level
It ranges from 20% to 50%
Central subsidy from IDAE
19% capital subsidy
70% soft loan (Euribor – 2,5%)
Duration of feed-in tariff not established by law
Budget IDAE for 2003 = €12m – Enough for around 10MW

5. IDAE ICO Bank End-user Loan IDAE – how does it work? €11.666 €10.233
€31.150
End-user
Loan
€20.917
(Euribor +1)
ICO = Instituto de Credito Oficial
IDAE = Instituto para la Diversificación y Ahorro de la Energía
System cost: € VAT
Capital subsidy (19%) €
Soft loan (70%) € =
Total loan (89%) €31.150
Capital subsidy (19%) €
Interest reduction € =
Total (ICO) €
Commission € =
Total (IDAE) €11.666

6. Cash flow analysis Subsidy: Feed-in tariff Feed-In tariff: 0,4 €/kWh
Duration: Not established
System size 5 kWp
System cost € VAT
kWh/kWp/year: 1200
Maintenance: 0,7% /year
System life: 30 years
Discount rate: 4%
Loan: 0 €
NPV: €
Payback: No payback

7. Cash flow analysis Subsidies: Feed-in tariff IDAE
Feed-In tariff: 0,4 €/kWh
Duration: Not established
IDAE: 19% + soft loan
System size 5 kWp
System cost € VAT
kWh/kWp/year: 1200
Maintenance: 0,7% /year
System life: 30 years
Discount rate: 4%
Loan: €
NPV: €
Payback: No payback

8. Cash flow analysis Subsidies: Feed-in tariff IDAE Regional subsidy
Feed-In tariff: 0,4 €/kWh
Duration: Not established
IDAE: 19% + soft loan
Regional subsidy: 30%
System size 5 kWp
System cost € VAT
kWh/kWp/year: 1200
Maintenance: 0,7% /year
System life: 30 years
Discount rate: 4%
Loan: 17,000 €
NPV: €
Payback: 15 years
IRR: 7,26%

9. Subsidies available in Spain
In Spain there is a proposal for a feed-in tariff of €0,6/kWh but at the moment it doesn’t seem it could go ahead

10. Activity of typical PV installer
Companies struggle to have installers on their books because the workload has a big peak and then is flat for a large part of the year. This has an impact on installation costs.

11. Availability of regional subsidies
Grid connect subsidy > 30%
Grid connect subsidy < 30%
No grid connect subsidy
5 regions account for almost 70% of all the projects approved.
It would be reasonable to expect more solar installed in the south but it is not like that. Delays, bureaucracy and different rules of the regional subsidies slowed down solar installations in many regions.
In Germany most of the installations are in the south where there is more sun available. The subsidy scheme is working!

12. IDAE - Projects approved in 2003
Region kWp
Pais Vasco 863
Navarra 854
C. Valenciana 763
Castilla León 603
Madrid 475
Cataluña 325
Murcia 250
Andalucia 184
C. La Mancha 102
Other 335
Total
5 regions account for almost 70% of all the projects approved.
It would be reasonable to expect more solar installed in the south but it is not like that. Delays, bureaucracy and different rules of the regional subsidies slowed down solar installations in many regions.
In Germany most of the installations are in the south where there is more sun available. The subsidy scheme is working!
Source: IDAE

13. Split of installations (IDAE 2003)
Total: 4,636 kWp
Source: IDAE

14. Main problems
Feed-in tariff limited to 50MW and not guaranteed for a minimum number of years.
No clear rules available for everyone.
Bureaucracy.
Delays.
High selling prices to end users.
Module cost (€/Wp) more important than system quality.
Peaks in the demand.
Barriers to connect the systems to the grid.
Bureaucracy increases system cost
Module cost more important than system quality. Specifically true for public tenders.

15. Foreseeable changes
No limit of MWs that can get access to the feed-in tariff.
Feed-in tariff guaranteed for 25 years and revised every 4 years (only for new systems)
Increase of maximum system size that can get access to premium feed-in tariff.
Small increase of the feed-in tariff and link with electricity prices.
Availability of zero interest loans.
New building law for new buildings > m2
Hasta 30 KWp se pagará un 575 % del precio de la tarifa de la electricidad (unos 40 euroCents)
Para instalaciones de más de 30 KWp se pagará el 300 % del precio de la tarifa de la electricidad (unos 22 euroCents)
El precio de la tarifa será de aplicación por un periodo de 25 años o durante el ciclo de vida del sistema
En función de los avances de la industria cada 4 años se actualizará la prima para nuevas instalaciones respetando las primas en instalaciones antiguas, pero pudiendo solicitar adecuarse a la nueva prima si ésta fuera mejor .
Document on savings and energy efficiency submitted and approved by Spanish government. Now under EU revision. New buildings >5.000 m2 obbliged to install solar (thermal or PV). Around 30 kWp. Expected final approval by May 2004.
Regolamento edilizio

16. The experience of Spain on PV incentives
Valerio Ferro, Marketing Manager, BP Solar

17. Backup slides