Small Solar Investors Face Market Exit Amid Regulatory Changes and Financial Losses

62,000 Small Solar Energy Investors Say: “We’re Being Forced Out of the Market; Many Have Had to Sell at a Loss”

Despite their commitment to solar energy, small photovoltaic investors are facing significant challenges. Among the issues they contend with are salary cuts of up to 50% without compensation from the PSOE and PP, coupled with regulations that continue to diminish their income. These retroactive cuts in remuneration began with the Socialist governments in 2010 and were later exacerbated by the PP governments starting in 2012, effectively rendering the “Official State Gazette” meaningless.

While the situation has become more favorable for consumers—thanks to the contributions and efforts of these small investors—the same cannot be said for the investors themselves. With greater financial strength, larger investors are better positioned to benefit from economies of scale, leaving small investors at a disadvantage. “They’re forcing us out of the market. Many have had to sell off,” lament the small investors, who comprise around 62,000 families, including approximately 8,500 in Catalonia, particularly in rural areas. They are now seeking solutions from the Ministry of Ecological Transition.

This plight unfolds amid the Spanish government’s decision to allocate $32 million in compensation following an arbitration award from the World Bank’s ICSID. However, this compensation will not reach small investors; instead, it will benefit the Blasket Fund, a litigation specialist that acquired these rights from JGC Holdings. Until now, the State had refused to pay, but has ultimately decided to do so. ICSID has recorded 38 renewable energy claims involving Spain, including both resolved and pending cases—mostly from the PP era—matching the figures for awards related to breaches of the Energy Charter in Argentina and Venezuela, according to the National Association of Energy Producers.

Unfortunately, small Spanish investors who risked their savings to promote the widespread use of solar energy, encouraged by the Spanish government, have not received any compensation after losing their lawsuit in the Supreme Court. Unlike foreign investors, they are compelled to seek justice through Spanish courts. “Do Spanish families deserve worse justice than large international funds?” questions Anpier. Miguel Ángel Martínez-Aroca, president of Anpier, asserts that the ecological transition in Spain, which has made energy cheaper than in neighboring countries and enhanced business competitiveness, masks a “fiasco” that is “neither social nor fair.”

According to CaixaBank, renewables have indeed bolstered Spain’s industrial competitiveness. Àlex Valls, who, along with his siblings, invested in a solar plant in Santa María de Miralles (Anoia) using the proceeds from their family’s SME sale in 2008, recalls that they entered the business in response to the Spanish government’s promotional recommendations. At that time, solar technology was still developing and costly, and they invested nearly one million euros—about 30% of their capital—backed by a bank loan with a 30-year premium payment that drastically changed after just two years. The courts later ruled that, even though the regulations were published in the Official State Gazette (BOE), investors should have “assumed the risk of regulatory changes.”

Thanks to the dedication of these pioneers who followed state guidelines encouraging investment in small installations of up to 100 kilowatts (kW), the costs of panels have dropped by as much as 90%. “Many self-employed workers and farmers embraced this opportunity, aiming to diversify their activities, retain young people who wanted to leave rural areas, and contribute to the energy transition,” states Albert Mases, Anpier’s representative in Catalonia, who invested in Les Borges Blanques (Les Garrigues) with his family.

Initially, financial institutions viewed the business as secure, given the backing of the Official State Gazette (BOE)—similar to public debt—with a ten-year amortization period and thirty years of guaranteed returns. However, in response to the crisis, the Socialist government cut remuneration in 2010, altering the rules mid-game. They extended the bonus remuneration period by five years, but “the problem of legal uncertainty had begun,” according to Valls. In 2014, the PP drastically revised the system to rely on estimated values for theoretical installations rather than a price per kilowatt (kW), resulting in cuts of 30%, 40%, and even 50% on investment financing.

Many small investors were forced to refinance their debts, extending payment terms to 15, 17, or nearly 20 years, which came with higher interest rates. Others had to sell their facilities, leading to situations where “producers had money coming in one way and money going out the other” to service their debts, Mases adds. He highlights the injustice faced by those who, following government advice, invested in solar energy and helped make solar panels more affordable and increased the country’s energy price competitiveness. This initiative had also fostered economic diversification in rural areas, with the funds remaining local.

After their negative experiences, many small investors are now reluctant to consider new investments: “We’ve learned our lesson,” Mases remarks. This has resulted in a shift away from a decentralized model toward one that resembles the fossil fuel energy system, dominated by large companies owning extensive wind and solar farms. As a consequence, many small investors have been compelled to sell their assets to eliminate their debts. According to Anpier, the share of small installations has plummeted from 62% of installed capacity in 2007 and 2008 to a mere 0.5% of new installations today.