Promoting Market Based Development of Small to Medium Scale Renewable Energy Systems in Cape Verde CAPE VERDE : ENERGY ANALYSIS AND RECOMMENDATION UNDERTAKEN BY UNIDO AND ECREEE i Promoting Market Based Development of Small to Medium Scale Renewable Energy Systems in Cape Verde TABLE OF CONTENTS LIST OF TABLES ................................................................................................................. v LIST OF FIGURES ................................................................................................................ vi LIST OF ABBREVIATIONS ................................................................................................ vii 1 Introduction ................................................................................................................ 1 2 Review of Electricity Sector in Cape Verde .............................................................. 2 2.1 Overview ........................................................................................................ 2 2.2 Sector objectives ............................................................................................ 2 2.3 Generation Capacity ....................................................................................... 3 2.4 Transmission and distribution ........................................................................ 8 2.5 Energy balance – demand and supply ............................................................ 9 Electricity generation ...................................................................................... 9 Electricity Consumption ................................................................................. 12 Power Load Shedding .................................................................................... 13 Losses 14 2.6 Electricity consumers ..................................................................................... 17 2.7 Cost of energy provision ................................................................................ 18 2.8 Electricity tariffs ............................................................................................. 18 3 Future demand projections ......................................................................................... 20 4 Electrification / Improvement Projects ...................................................................... 22 4.1 Service improvements in CV ......................................................................... 22 Power Supply, Transmission and Distribution Lines Project in Santiago Island ............................................................................................... 22 Project for Energy Production Centralization on 4 islands: St. Antão, Fogo, São Nicolau and Boavista .................................................................... 24 Programme to support the implementation of the Poverty Reduction Strategy Paper II (PRSP 2008-2011) .............................................................. 25 4.2 Rural Electrification ....................................................................................... 26 Rural Electrification Programme .................................................................... 26 Promoting market based development of small to medium scale renewable energy systems in Cape Verde ...................................................... 27 MARTIFER Project: Renewable Energy Plan ............................................... 28 Cabeólica Wind Farm projects in Santiago, Sal, São Vicente and Boavista .......................................................................................................... 29 4.3 Cooperation Projects Related with Renewable Energy .................................. 29 ii Promoting Market Based Development of Small to Medium Scale Renewable Energy Systems in Cape Verde Indicative Programme of Cooperation Luxemburg-Cape Verde 2005- 2010 29 Indicative Programme of Cooperation Luxemburg-Cape Verde 2011- 2015 30 5 Institutional and Regulatory Framework .................................................................... 32 5.1 Existing legal and regulatory frameworks ...................................................... 32 Cape Verde National Energy Policy, 2008 ..................................................... 33 Decree-law nº14/2006, of 20 of February and Decree-Law nº54/99, of 30 of August and ............................................................................................ 34 Decree-Law No. 30/2006 of 12 June .............................................................. 35 Ordinance nº18/2006 of 24 July ..................................................................... 36 Ordinance nº21/2006 of 28 August ................................................................ 36 Decree-law nº41/2006 of 31 July ................................................................... 37 Art. 54 of Law nº4/VII/2007 of 11 January .................................................... 37 Decree-Law n.1/2011 of 3 rd of January on Promotion and Incentive for the Use of Renewable Energy ................................................................... 37 Decree-Law nº 26/2003, of 25 August ........................................................... 38 ECOWAS Treaty ............................................................................................ 39 5.2 Institutional Framework ................................................................................. 41 Ministry of Tourism, Industry and Energy (MTIE) ........................................ 41 Ministry of Finance ........................................................................................ 42 Ministry of Environment, Agriculture and Fisheries (MAA)......................... 42 ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE) ...................................................................................................... 46 Economic Regulatory Agency (ARE) ............................................................ 50 ELECTRA, SARL .......................................................................................... 52 Renewable Energy Research Group (NER, Núcleo de Investigação em Energias Renováveis) ..................................................................................... 53 6 Baseline Projection of Green House Gases ................................................................ 54 7 Opportunities for renewable energy ........................................................................... 59 7.1 Biomass resource and opportunity ................................................................. 59 7.2 Wind resource and opportunity ...................................................................... 59 7.3 Solar resource and opportunity ....................................................................... 61 Photovoltaics .................................................................................................. 64 Solar Water Heating. ...................................................................................... 65 iii Promoting Market Based Development of Small to Medium Scale Renewable Energy Systems in Cape Verde 7.4 Hydro Power ................................................................................................... 65 7.5 Geothermal Power .......................................................................................... 66 7.6 Ocean Power................................................................................................... 66 7.7 Other Opportunities ........................................................................................ 66 Passive Cooling .............................................................................................. 66 8 Experience of renewable energy technology in CV ................................................... 67 8.1 Biomass .......................................................................................................... 67 8.2 Wind ............................................................................................................... 67 8.3 Solar Projects .................................................................................................. 67 9 Barriers to Renewable Energy Development in CV................................................... 69 9.1 Financial Barriers ........................................................................................... 69 High capital costs / Limited budgets .............................................................. 69 High transaction costs .................................................................................... 70 Financing institutions / Banking sector loan rates .......................................... 70 9.2 Institutional and Regulatory Barriers ............................................................. 71 Insufficient support for RE and lack of institutional capacity ........................ 71 9.3 Technical Barriers .......................................................................................... 72 Insufficient technical capacity in the market to identify, develop and implement renewable energy projects ............................................................ 72 Technical limitation of integrating RE systems in to the grid ........................ 72 9.4 Information and Awareness Barriers .............................................................. 73 Lack of information on renewable energy technology and opportunities ..................................................................................................