Presentation on Home Appliances by dwc17962


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                 Fact sheet Portugal
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REFUND + project

Fact Sheet Portugal

Part 1. Description of the measure
Type of the measure                                                 Income tax deduction

Targeted RES                 Individual solar thermal appliances, individual geothermal heat pumps, individual wood heater

                             Household investors can deduct a tax amount on their individual income tax (IRS) for investment in
                             renewable energy technologies (in main residence or secondary habitation), excluding persons with
Description of the current
                             professional or entrepreneur incomes . Tax deduction is calculated on the basis of 30% of the
                             investment made, with a ceiling of 761 € per year (rules for 2007 income tax). However, these
                             deductions were not cumulative, between 2001 to 2007, with other deductions concerning home
                             purchasing or conservation expenses.
                             For 2007, the conditions of eligibility are (for all RES targeted) :
                             The appliance must be bought (the consumer has to join to his tax declaration an invoice or
                             equivalent document).
                             National legislation doesn't specify any technical requirements, only refers the equipment applicable
                             for this purpose:

                             1) New equipment for heat generation using renewable energy sources (since 1991):
                               • individual solar thermal installations using flat or concentrated solar collectors
                               • heat pumps for water heating
Conditions of eligibility      • heating systems using biomass (fireplace insert, stove, woodboiler, etc.)

                             2) New equipment for electricity generation using renewable energy sources (since 1991):
                               • solar photovoltaic panels and respective control and storage of energy system supplying electric
                             energy for houses
                               • wind power generation units below 5 kW of installed capacity and respective control and storage
                             of energy system, supplying electrical energy for houses

                             3)New Equipments for the production of electric and thermal energy (cogeneration) by microturbines
                             with a capacity up to 100 kW using natural gas (since 2002)

                             The tax deduction is implemented since 1991 with variations regarding the tax deduction ceiling and
Implementation date
                             eligibility criteria.
                             The maximum limit deduction is established each year by the annual State Budgets. The tax
                             deduction scheme has evolved since 1991. There are two distinct periods.
                             Between 1991 and 1997, the cost of renewable energy equipment could be deducted directly from
                             the total net income, before the calculation of the income tax was applied. However a maximum
                             value was defined each year regarding the fiscal potential deduction. In 1991 the maximum ceiling
                             was 399€.
Describe how the measure     After 1997 it was established a percentage of the expenses with renewable end-use technology
                             (including equipment necessary to its functioning) that could be deducted from the calculated income
evolved since its first
                             tax. The percentage changed from 20% of total cost in 1998 and 1999, to 25% in 2000 and to 30%
                             since 2001.
                             So in 2007 the legislation allows about one third of the expenses on equipments of renewable energy
                             to be deducted from annual taxation of families’ income with a fixed ceiling (761 euros). The tax
                             deduction for consumer household excludes persons with professional or entrepreneur incomes. Since
                             2001 the RES-Heat tax deduction cannot be cumulated with deduction related to house loans
                             If a family has expenses with both categories only the highest deduction is considered.
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Fact Sheet Portugal

Part 2. Description of the national context surrounding the measure implementation

                                             A national campaign regarding Solar thermal equipments and
                                             installers was launch during the years 2002-2004.
National policies in favour of RES in place
                                            In the same time, the solar thermal sector was reorganised with new
at the time when the fiscal measure was
                                            quality requirements for equipments and installers.
                                             No particular policy towards biomass heating devices and geothermal
                                             heat pumps for domestic application has been defined.

                                             The national programme "Água Quente Solar for Portugal" for solar
Country main policy concerning the
                                             thermal sector was launch in 2002.
promotion of the RES targeted by the
                                             New thermal regulation for buildings (since 2007) which
                                             requires/promote the integration of renewable energy technologies.

Country objectives concerning the RES        The national objective for solar thermal is to install and run 1 million
targeted by the measure                      m2 of solar collectors by 2010.

Country experience concerning fiscal         VAT applied to RES appliances is 12% since 2002 instead of the
measures towards domestic consumers          normal VAT rate (21% in 2007) for appliances.

                                             Before 2001-2004, RES in household were not really pushed and
The specific situation of the country when promoted by the government.
the measure was implemented                Regarding the energy situation of the country, the fossil fuel prices
                                             were relatively stable (but strong increase since 2004).

                                              Low market for all RES targeted by the fiscal measure.
                                               - For individual solar thermal appliances: Declining of the solar
                                              thermal market since 1985 to 1994. Recent small increase but far
                                              from the required growth to achieve the national objective for 2010.
                                              Commercialisation of solar energy for hot water has steadily declined
What was the growing trend of the
                                              to 22,000m2/year in 1990 and to less than 5,000m2/year in 2002.
targeted sectors before the
                                               - For individual wood heater: Before the implementation of the
implementation of the measure studied
                                              measure the market had no expression. The fiscal measure had a
                                              positive impact in the 90's with the first scheme but the current
                                              scheme seems to have a lower effect on market.
                                               - For individual geothermal heat pumps: this is an emerging
                                              market with no expression until now.

                                             A “solar boom” occurred in Portugal in the late 70’s - early 80’s
                                             period, but the entrance on the market of a large number of new
                                             players (manufactures, importers and installers) was not followed by
                                             accompanying measures aiming to increase public awareness and to
                                             guarantee quality of products and services. Most of the systems
What was the industrial development          installed in that period failed in short time and, as a consequence, the
level of the targeted sectors before the     solar collectors bad image started growing.
implementation of the measure studied        The biomass heating market is a traditional market characterised by a
                                             lot of actors (equipment sellers, installers and biomass suppliers) and
                                             by a lack of organisation and quality requirements.
                                             The geothermal heat pump market should be a fast growing market
                                             but is still very incipient for the time being in Portugal.
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Fact Sheet Portugal

Part 3. Other elements influencing the implementation of the measure

                                          Since the 90's: The main support policy was through tax reduction
                                          for RES in household.
Importance of the measure relatively to
                                          Since 2007, new building regulation enforce the installation of solar
organisation of support measures
                                          thermal collectors and other renewable energy technologies for
                                          heating and cooling allowing some exceptions.

                                          Since the 90's: The main support policy was through tax reduction
                                          for RES in household.
What were the other measures
                                          Since 2001, solar thermal equipments beneficiated with a reduced
implemented in favour of the RES
                                          VAT rate of 12% (instead of a normal rate of 21% in 2007)
targeted by the studied fiscal tool
                                          Since 2007, new buildings have to install solar thermal collectors with
                                          some exceptions.

                                          The existence of this fiscal measure was announced through national
Organisation or actions taken to broaden
                                         promotion campaign in the media about the advantages of renewables
the effect of the measure
                                          and associated end-use technologies.
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Fact Sheet Portugal

Part 4. Description of the measure results

                                          As the fiscal declaration is currently structured it is not possible to
                                          know the relative importance of the different renewable heating
                                          sectors. Fiscal declaration only requires information on cost to be
Information about the cost of the         deducted and doesn’t discriminate between renewable supply
measure                                   systems. Since 2002 the total value deducted was around 5 million
                                          euros each year. Considering the fact that the fiscal deduction could
                                          not be cumulated with the house loans payments deduction between
                                          2001 and 2007 or its benefit is only marginal, the relative minor
                                          importance of this measure is evident.
                                          Since 2004, the fiscal deduction with renewable energy equipment was
                                          used by about 15,000 families which represents only 0.4% of total
                                          number of households with fiscal declaration. At the same time, more
                                          than one million of households (25% of total fiscal households) used
Information about how many people
                                          house loans payments’ deduction and therefore could not benefit or
claim for support through the measure
                                          only marginally , from fiscal deduction with investment regarding
                                          renewable energy equipment. The total value deducted was estimated
                                          to reach 5 million euros (annual values). It is not possible to know the
                                          relative importance of the different renewable sectors.
                                          Technologies using RES in the domestic sector are not sufficiently
                                          known by the public and/or are globally very expensive. Most potential
                                          consumers consider fiscal incentive not attractive enough. Actually tax
                                          deductions associated to investment on renewable equipment cannot
                                          be added to other dwelling’ expenses. This configuration strongly
                                          reduces the potential effect of the measure to stimulate the selling of
                                          renewable energy appliances in the household sector.
                                          For solar thermal:
Conclusion about the success/failure of   The tax deduction measure had a very small positive impact. The
the measure                               market growth estimated for solar thermal collectors during 2002-
                                          2004 was high but since the base year value is very small, the impact
                                          is not significant when compare to the annual objective required to
                                          reach the national target for 2010.
                                          For other technologies:
                                          The amount of the tax deduction is considered too low by the actors in
                                          the market, when compared to the investment costs.
                                          The way this fiscal measure was structured since 2001 seems to show
                                          that the government was giving more importance to support the
                                          building sector (with high national effects in terms of employment and

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