CAPE VERDE GREEN ENERGY FL

Promoter – Financial Intermediary

MINISTRY OF INDUSTRY, COMMERCE AND ENERGY - REPUBLICA DE CABO VERDE

Location

• Cape Verde

Description

The project consists in the design and construction of a set of inter-related electricity generation, network and storage components during the 2023-2029 period under Cape Verde's National Electricity Masterplan (2018-2040).

Additionality and Impact

The overall objective of this action is to implement a proof of concept of sustainable energy financing programme for fragmented markets and help the Government of Cape Verde achieve the proposed target of at least 50% renewable energy in electricity generation by 2030.

 

The project is expected to have very good economic rate of return. While the capability of the subprojects' promoters will be checked upon allocation request, the Project Promoter, The Ministry of Industry, Commerce and Energy (MICE), is deemed capable of implementing the framework with the adequate consultancy support in place.

 

EIB financing will contribute to the following objectives in Cape Verde: (i) reducing the CO2 and other emissions from the power sector; (ii) enabling the integration of high shares of wind and solar power; (iii) improving power quality and support the security of the electricity supply, (iv) reducing current high electricity costs. The Programme will address the market failure associated with security of supply, which has dimensions of public good, and the climate and environmental externalities through the reduction of carbon emissions and air pollution.

 

The operation will contribute to the Bank's objectives on decarbonising the electricity supply, securing the enabling infrastructure, and on climate action finance outside the EU in the context of the Nationally Determined Contributions for Cape Verde. It is expected to provide an excellent contribution towards EU policy objectives and the Global Gateway initiative. It will contribute to EU policy objectives with regard to sustainable energy infrastructure, combating climate change and will support directly various Sustainable Development Goals (SDGs).

Objectives

As part of the EU's Global Gateway strategy, EIB Global is supporting this project, which is expected to contribute to the complete phasing out of Cape Verde's reliance on expensive and polluting fossil fuels as its primary source of energy by 2040 at the latest. The project will also ensure that the new storage capacity made available, including via a pumped storage facility, will be dedicated to electricity generated from renewable energy sources. Furthermore, the Project is expected to have a critical indirect effect on the water sector in Cape Verde as most of the country's water supply comes from water desalination, which requires significant energy resources. As a pilot to be potentially replicated in other countries in the West Africa region facing similar "fragmented markets" challenges, the Project is expected to have important regional benefits. In this context, the project is aligned with the EU's regional Multi-Annual Indicative Programme for Sub-Saharan Africa (RIP - 2021-2027) and its Global Gateway initiative to boost sustainable links, including energy links, around the world.

Comments

N/A

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Under Global Europe NDICI guarantee

Under EFSD+ Guarantee

Proposed EIB finance (Approximate amount)

EUR 145 million

Total cost (Approximate amount)

EUR 240 million

Environmental aspects

If the project was located within the EU its components would fall under Annex I of the EIA Directive (2011/92/EU as amended by Directive 2014/52/EU), which requires an Environmental Impact Assessment (EIA) and Annex II of the EIA Directive (2011/92/EU as amended by Directive 2014/52/EU), which requires the competent national authority to determine the need for an EIA. The Project may also include communication, automation and digitization components that may not require EIA screening. The impacts that can be typically expected for some grid components relate to visual impact, impact on flying vertebrates, electromagnetic fields, noise nuisance, and disturbances during construction, SF6 gas, PCBs polyclorinated biphenyls, as well as the possible impacts on protected fauna and flora (Habitats 92/43/EC and Birds 2009/147/EC). The pumped storage facility may have a significant environmental and social impacts as well as water resource impacts that will be reviewed during due diligence. The Project components that will be located in or near protected areas will require appropriate assessments, a condition to their inclusion in the Project. The Project aims at decarbonizing the electricity grid of Cape Verde and it is expected to contribute to climate change mitigation. The Bank will review the Project's potential environmental impacts in detail at appraisal stage.

Procurement

The promoter has to ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement. In particular, the >EIB will require that calls for international tenders will be published in the OJEU in accordance with the EIB's Guide to Procurement.

Status

Signed - 29/12/2023