The African Development Bank Group (AfDB) has approved a €19.6 million ($22m) financing package to support Phase II of the Cabeólica Expansion Project in Cabo Verde. The project marks the Cabo Verde’s first large-scale renewable energy project to combine wind power generation with battery energy storage systems (BESS).
The financing package includes a loan of approximately €12.6 million from the African Development Bank, and €7 million in concessional loan financing from the Bank Group-managed Sustainable Energy Fund for Africa (SEFA).
Building on the success of the original Cabeólica power project commissioned in 2012, Phase II will add 13.5 megawatts of wind generation capacity and 26 megawatt-hours of grid-connected battery energy storage. The expansion is expected to generate over 60 gigawatt-hours of clean energy annually, eliminating expensive thermal generation and reducing carbon dioxide emissions by an estimated 50,000 tonnes annually.
“This project is a testament to Cabo Verde’s long-term vision to decarbonize its power sector and enhance its resilience. It also demonstrates how private sector investment, facilitated by catalytic concessional financing, can deliver cost-effective, sustainable energy solutions for small island economies,” said Wale Shonibare, Director for Energy Financial Solutions, Policy and Regulations at the African Development Bank.
Diversifying Carbo Verde’s energy mix
Owned by Africa Finance Corporation (AFC), A.P. Moller Capital, and Cabo Verdean public entities, Cabeólica S.A. is the country’s first independent power producer (IPP). Phase II of the project will be underpinned by a 20-year power purchase and storage services agreement with the national utility Electra S.A., at tariffs significantly lower than the national average generation cost.
“As the first renewable energy commercial scale PPP in sub-Saharan Africa, Cabeólica is again proud to lead this transformative expansion project comprising additional wind capacity and battery energy storage,” said Ayotunde Anjorin, Chairman of Cabeólica and Senior Director and CFO at Africa Finance Corporation.
“This project underscores Cabeólica’s deep commitment to delivering reliable, clean energy infrastructure in line with national goals and priorities and continues to set a replicable model for the region,” added Anjorin.
The project’s expansion will involve five installations across four islands: a wind expansion on Santiago and BESS deployments on Santiago, Sal, Boa Vista, and São Vicente.
The battery energy storage system will support ancillary grid services such as frequency response and voltage regulation, enabling more efficient use of intermittent wind power and reducing curtailment.
Additionally, the project is expected to help Cabo Verde diversify its electricity generation system which is heavily reliant on imported fossil fuels. The project advances Cabo Verde’s goal of generating 50% of its electricity from renewables by 2030 as well as its Nationally Determined Contribution under the Paris Agreement.
Furthermore, these upgrades are expected to reduce electricity costs and enhance energy security. AfDB says the project aligns with its ‘Light Up and Power Africa’ High-5 priority, its Ten-Year Strategy, and SEFA’s Green Baseload pillar.
“SEFA’s support for the integration of battery storage into Cabo Verde’s power system enhances power security and grid reliability while reducing generation costs in Cabo Verde,” said Daniel Schroth, AfDB’s director for Renewable Energy and Efficiency. He noted that the project highlights the added value of the right mix of financing and technology to strengthen long-term power sector sustainability.
