Luxembourg tempts more people to start producing solar energy with tax cuts

The move is supposed to boost the whole sector and fuel the Grand Duchy’s renewable transition

Yesterday, the Luxembourgish Ministry of Energy and Spatial Planning announced a new policy intended to help small producers of solar energy, in a bid to push for more renewables across the country. Under the new rules, income from the sale of solar energy from photovoltaic installations that do not exceed 10 kWp (kilowatt-peak) will be tax-free. The new rules will apply retroactively from 1 January 2021.

Additionally, the government launched the fourth call for tenders for large-scale solar plants, accounting for roughly 55 MW. This is the equivalent consumption of 35,000 residents. They have announced five lots for redevelopment including industrial sites, building envelopes and water basins.

Targeted small producer growth

According to the Ministry of Energy and Spatial Planning, in 2020, solar energy production in the Grand Duchy could service the needs of 120,000 people. During the last six years, local authorities’ efforts have pushed the energy production capacity of Luxembourg by around 70 %, from 110 MW to 187 MW.

The government has commissioned 609 photovoltaic installations in 2020 alone and they want to be even more active. This is what prompted the widening of the tax exemption for small installations.

Minister of Finance, Pierre Gramegna, explained that thanks to fiscal flexibility, more people will have the chance to take an active part in the renewable transition in Luxembourg.

Minister Turmes explained that solar energy plays a major part in the country’s transition and objective of reaching 25% renewable energy production. Solar power is a key component of the plan to reduce greenhouse gas emissions by 55% by 2030, in comparison to 2005.

Minister Turmes, continued: "By allowing more players, whether individuals installing small photovoltaic panels, or owners with large surfaces, to benefit from advantageous conditions, we hope to further convince a bigger share of the population that photovoltaic energy is not only good for the climate but also a profitable and lucrative investment."