Spain slaps windfall tax on power companies

Facebook
Twitter
LinkedIn
Reddit
Email
A 180MWp solar project in Spain’s Extremadura region. Image: ib vogt.

Spain will introduce a windfall tax on power companies and banks from next year to fund measures designed to help Spaniards cope with soaring inflation.

Annual revenue from the tax on extraordinary profits of large electricity, oil and gas companies in 2023 and 2024 will be €2 billion (US$2 billion), Prime Minister Pedro Sánchez told parliament in a state of the nation address yesterday.

The measure will come into effect from 1 January 2023 and apply to extraordinary profits secured by companies over 2022 – 2023.

Also announced was a windfall tax on banking entities that will last for two years and is expected to raise €1.5 billion per annum.

“This government will not tolerate that there are companies or individuals that take advantage of the crisis to amass wealth at the expense of the majority,” Sánchez said.

Inflation, he explained during the speech, is now the main challenge facing Spain and most world economies. 

Funds raised will be used to provide free travel on commuter trains between September and December and build new houses in Madrid, among other measures.

The policy comes after Spain’s government introduced a mechanism last year to limit windfall profits of renewables plants projects with a capacity greater than 10MW that sell power on the merchant market.

In addition, industry groups warned last month that a proposed law in Spain that is designed to claw back revenues from emissions-free power plants would create risks for renewables investors.

According to a letter sent to the European Union by trade bodies such as Eurelectric and WindEurope, Spain’s government has relaunched the legislative procedure on the draft law for a new regulation that will reduce the revenues of non-CO2-emitting generation facilities installed before 2003. The draft law, they said, “seriously undermines investment incentives” for decarbonised electricity generation.

Renewables asset owners in Italy have also been hit by measures to claw back profits stemming from high electricity prices. The country’s government announced in January it would limit the windfall profits of some feed-in tariff-backed PV projects as part of a policy that is impacting more than half of the country’s solar fleet, according to one estimate.

Read Next

August 10, 2022
Iberdrola has commissioned the 590MW 'Francisco Pizarro' PV project in Extremadura Southwestern Spain, which is Europe’s largest solar plant.
August 9, 2022
The Public Service Commission of the District of Columbia (DCPSC) has approved a 15-year power purchase agreement (PPA) with renewables developer Invenergy for 73MW of solar power to meet a 5% renewables target for district’s default electricity supply.
August 3, 2022
Last week, the Australian federal government proposed legislation that will lock-in Australia’s commitment to achieve net zero by 2050 as well as providing greater oversight and accountability over progress on climate change in a sharp departure from the previous administration.
August 3, 2022
Global investment in renewable energy reached a record half-year figure of US$226 billion in H1 2022, driven by soaring demand for clean energy technologies amid the ongoing energy and climate crisis, according to a BloombergNEF (BNEF) report.
August 3, 2022
Spain has started the process to celebrate a fourth round of renewables auction in November with 1.8GW of solar capacity to accelerate its electrification.
July 29, 2022
Thin-film module manufacturer First Solar will consider expanding its production footprint in the US if proposed legislation that includes manufacturing credits becomes law, the company’s CEO has said.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
September 7, 2022
15:30 AEST (UTC +10)
Solar Media Events
September 14, 2022
London
Solar Media Events
October 4, 2022
New York, USA
Solar Media Events
October 11, 2022
Virtual event