Aragon considers approving new taxes on wind and photovoltaic generation
Published on 29th Feb 2024
The draft law introducing new taxes in Aragon has been approved but has generated significant concern in the sector
The Governing Council of the Community of Aragon approved on 30 January 2024 the draft law taxing the environmental impact of wind and photovoltaic installations and modifying the environmental tax on high-voltage electricity transmission installations.
The draft bill, according to the note published by the government council of Aragon, aims at creating two new taxes and modifying the existing one for high-voltage electricity transmission installations.
The draft bill has been in the pipeline since the previous legislature and, as pointed out by the government of Aragon in the consultation on the preliminary draft, the aim of these taxes is to correct the "negative externalities" caused by this type of project. Therefore, not all the positive externalities of renewable electricity generation facilities are taken into account.
New taxes: the details
As for the details of these new taxes, for the moment the government of Aragon has indicated that the 99% rebates and exemptions are envisaged for projects that generate wealth and economic impetus, such as, for example, the Nudo Mudéjar project being developed in the province of Teruel.
The same 99% exemptions are contemplated for those business developments that involve measures to fix the population in the Aragonese territory, to create employment and to benefit the municipalities where they are installed.
As for the use of the proceeds, a percentage of the revenue will be earmarked for measures to combat depopulation. An environmental fund will also be created for reinvestment in the territory.
For wind projects, a variable part will be taxed depending on the height of the wind turbine and a fixed part depending on the power of the installation.
In the case of photovoltaic projects, taxation is based on the surface area of the installation.
As for the expected revenue, the Aragonese governing council points to an expected annual revenue of €30 million.
Impact on location decisions
As has been publicly denounced by APPA (the Association of Renewable Energy Companies) and AEE (Wind Energy Business Association), these taxes will have a very significant impact on projects located in the autonomous community of Aragon and will have to be taken into account when deciding on the location of future projects to be developed in the Iberian Peninsula. Likewise, and due to the downward impact on the cost of energy that these types of installations have, decisions on the location of other industries in the region could also be affected.
In any case, it should be noted that the community of Aragon is one of the autonomous communities in Spain with the highest installed renewable energy capacity, so the impact on the sector of any type of tax on this activity is extremely important.
If the draft bill is finally approved, Aragon will join Galicia, Castilla-León, Cantabria and Castilla-La Mancha in the group of autonomous communities that tax renewable generation.
Should you wish to know more about the new regulatory and energy sector rules and their possible implications, please do not hesitate to contact one of our experts listed below or your usual contact at Osborne Clarke. Osborne Clarke will continue to monitor any updates in Aragon in relation to the new taxes for wind and PV generation facilities.
