Spain’s draft laws that would make self-generated solar more expensive than regular grid electricity could expose the country’s banks to a €20 billion (US$26.6 billion) bubble, according to analysts NPD Solarbuzz.

Proposed new laws would fine those with solar panels making use of the old off-grid, self-consumption programme (known as “autoconsumo”) by as much as €30 million (US$39.9 million) if they did not connect to the grid.

Prices for grid connected solar have been hit with a new tariff that makes it more expensive than regular grid electricity forming a substantial barrier for the industry. Developers have also seen a cap on their return on investment that will significantly cut profits.

“Economic reports indicate that banks have loaned €38 billion to renewable energy projects in Spain, €20 billion (US$26.6 billion) of which falls on Spanish bank entities,” said Tim Murphy, NPD Solarbuzz in a recent blog.

“This comprises about 60,000 PV installations whose defaults may sum to €20 billion (US$26.6 billion), of which €14 billion (US$18.6 billion) are of Spanish entities.

“So far, only BBVA and Santander have quantified their renewables loan exposures at €1.9 billion (US$2.5 billion) and €1.5 billion (US$2.0 billion) respectively, which collectively amount to less than 10% of total loan exposure in all renewables,” writes Murphy.

“Spanish banks are not in a hurry to see a repeat of the real estate boom/bust outcome that resulted in them effectively becoming agency-branches that are required to sell property stock.”

The government’s draft laws are under consultation with the final versions expected to pass into law this autumn.

Industry groups have already indicated that they intend to challenge the plans in court themselves and expect investor groups hit by the new cap on profits to do the same.

On 1 August protesters, many of which were wearing solar panels, arrived outside a prison in Barcelona to “turn themselves in” for being supporters of solar energy that they claim the government’s hefty fines would effectively criminalise.