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As one of many small Insular States, Cabo Verde is a country which relies on the importation of fossil fuels to generate electricity. The importation increases the costs of electricity generation, thus enlarging the electricity cost for consumers. Furthermore, it has a negative impact in the trade balance and contributes as a source of fossil fuels for CO2 emissions.
At the same time, these insulars states have a tremendous potential in terms of renewable energy, usually sun and wind, and also geothermic, sea or vegetal raw materials. Some islands could indeed satisfy the totality of their electricity needs using only renewable sources. The cost of electricity production through renewable energy has decreased significantly, to the extent that in many cases, the electricity generation from renewable sources are cheaper than the electricity generation through diesel generators. Nevertheless, different political, economical, technical or financial obstacles, often prevent the best use of such potentials.
Against this background, the German Federal Ministry for Environment, Nature Conservation, Public Works and Nuclear Safety, commissioned the German Corporation for International Cooperation (Deutsche Gesellschaft für internationale Zusammenarbeit – GIZ) with the development of a project of the International Climate Protection Initiative (Internationale Klimaschutzinitiative). The objective of the project is counseling selected Insular States (Barbados, Cabo Verde, Kiribati, Vanuatu) about the use renewable energy sources to provide energy.
The advantages are clear:
- Reduction of CO2 emissions and air pollution.
- The trade balance will no longer be affected negatively by the cost of fossil fuels importation.
- Decrease of the electrical energy bills in houses, enterprises and public sector.
One of the objectives of this project is to support the private sector to invest in renewable energy, as well as measures related to energy efficiency. In many cases, enterprises, private sector or local institutions are not knowledgeable in terms of bankable business plans development for investments projects. In the other hand, several local banks have little experience with financing solar systems or wind parks and therefore, they are unwilling to assume the credit risks.
Credible and pertinent business plans are essential to attract more capital to the energy sector. These plans must attend the demands of the banks correspond to the national regulatory framework.
In this sense, the German Agency for International Cooperation (GIZ) invited the Portuguese-German Chamber of Commerce and Industry (located in Lisbon), to develop samples of three business plans including feasibility studies, a legal guide and a checklist of documents, as well as a summary possible financing instruments to be presented to the banks, that could be used as guide for investments in renewable energy.
The three business plans, were developed during 2016 in partnership with a Cabo-verdean consulting firm, a Portuguese law firm based in Cabo Verde and a local bank, based on real case scenarios, namely a PV system in a Hotel, the installation of a water pumping system in a plateau municipality, as well as a solar thermal system for water heating in a hospital. All the projects are located in different islands of Cabo Verde.
Privates, enterprises or local institutions now can use the business plans as models to elaborate their own investment plans.