A benchmark study for solar energy fiscal policy

Within the 2025–2026 strategic period, the Network of Cities and Towns for Sustainability has identified the local energy transition as a priority challenge. In this context, the Provincial Council of Barcelona has led a comprehensive analytical process to assess the actual impact of property tax (Impuesto sobre Bienes Inmuebles, IBI) incentives on the deployment of photovoltaic systems.

This initiative responds to the need for robust, evidence-based insights into the effectiveness, efficiency, and equity of this fiscal instrument. In its initial phase, an impact evaluation study—conducted by the consultancy KSNet—provided a detailed assessment of policy outcomes across municipalities. The findings were presented on 12 March in El Prat de Llobregat במסגרת the Network’s General Assembly.

Key findings: a policy instrument with demonstrated effectiveness and equity challenges

The results confirm that IBI incentives have been an effective mechanism for promoting photovoltaic self-consumption at the local level. Notably, they are associated with increases of up to 30% in the adoption of residential photovoltaic systems and generate a significant leverage effect on private investment, with approximately €10 of private capital mobilised per euro of tax incentive.

However, the analysis also indicates that policy impact is driven less by the nominal intensity of the incentive than by its administrative design, underscoring the importance of simple, transparent, and stable implementation frameworks.

From a fiscal perspective, the instrument is broadly sustainable. Nevertheless, municipalities with more limited revenue-generating capacity may face heightened exposure to fiscal shortfalls. Furthermore, a pronounced regressive bias has been identified: approximately 80% of granted incentives correspond to single-family dwellings, pointing to a concentration of benefits among higher-income households.

These structural limitations are further reflected in the limited compatibility of the current framework with energy communities. While the IBI is primarily designed to benefit property owners, energy communities are based on collective governance models involving diverse participants—including tenants—and shared investment structures, often characterised by relatively small individual stakes. This misalignment highlights the need to adapt fiscal instruments to better accommodate distributed and collective energy models. In this regard, the reform introduced by Royal Decree-Law 7/2026 creates new opportunities for municipalities to design targeted incentives for energy communities.

From evaluation to policy redesign: towards a more efficient and equitable framework

Building on these findings, a second phase has been undertaken focusing on the continuity and redesign of IBI incentives, with the objective of aligning this instrument with the requirements of a more inclusive and equitable energy transition.

This work, developed by BATEC with the participation of Aiguasol, integrates rigorous technical analysis with participatory processes, including stakeholder consultations across the sector. Our contribution has centred on identifying opportunities to enhance both the efficiency and equity of the current model, as well as on designing mechanisms to broaden access to solar self-consumption—particularly in urban contexts and among underserved populations.

The resulting policy recommendations are structured around three core pillars:

• Harmonisation and simplification: establishing consistent criteria across municipalities, streamlining administrative procedures, and reducing documentation burdens. The introduction of clear and stable regulatory timeframes is also recommended to enhance legal certainty.
• Economic optimisation: implementing caps to ensure budgetary sustainability and prioritising incentive schemes of moderate intensity and duration, typically within a two- to three-year timeframe.
• Equity and targeting mechanisms: calibrating incentive levels based on factors such as cadastral value and housing typology, while prioritising multi-family buildings and collective self-consumption initiatives through enhanced support. Additionally, restricting eligibility to primary residences is proposed to prevent the concentration of benefits in second homes.

Advancing a more effective and inclusive energy taxation framework

The analysis demonstrates that, despite its effectiveness, the IBI incentive alone is insufficient to address challenges such as energy poverty and upfront investment barriers.

Accordingly, it is recommended that this instrument be complemented by additional policy measures, including targeted subsidies for vulnerable households, the establishment of municipal climate funds, and dedicated support for local energy communities. These mechanisms can play a critical role in fostering inclusive participation, for example through reserved quotas or partial public financing. Furthermore, strengthening fiscal co-responsibility at the supra-municipal level is essential to safeguard the financial sustainability of municipalities with more limited resources.

Overall, the study underscores that while IBI incentives are a valuable tool for promoting photovoltaic self-consumption, further evolution is required towards more sophisticated policy frameworks capable of integrating social and territorial considerations.

Well-designed incentives can serve as a powerful lever to democratise access to energy, scale up collective self-consumption models, and enable broader participation in the energy transition.

In this context, the foundations are being established for a more intelligent, efficient, and equitable system of energy taxation—one that accelerates decarbonisation while avoiding the creation of new inequalities. Aiguasol reaffirms its commitment to supporting the development of innovative public policies that enable a genuinely inclusive and sustainable energy transition.