Cape Verde 100% Renewable Energy Plan for 2020

A strategic vision for the future.

October 2013

Engº Abraão LopesAbraoal@hotmail.comAbraao.lopes@igq.gov.cv

n Per capita income in 2010 was US$3.270 (in 1975 was US$190)

n External Debt: ~50.0% in 2010n Literacy rate in 2010: 87% for adults & 99%

for youngn HDI: 0,534n Life expectancy: 76 years in 2012n Unemployment rate: 16% in 2012

Population: Aprox. 520.000 (Census 2012)Area: 4.033 km2

Cape Verde snapshot

Cape Verde gained independence on 5 July 1975 facing major developmental challenges…

Cape Verde’s progress in socioeconomic development is widely recognized

n Signed a special partnership agreement with the European Union in November 2007

n Acceded to the World Trade Organization in December 2007

n Graduated from the list of Least Developed Countries in January 2008

369400

431467

496519

546572 580

647

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

kWh/capita

Strong growth in energy consumption and electrification rate, in 10 years

47%53%

58% 61% 64%69%

73% 76%

89%91% 95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Energy per capita, in KW/h/year

Electrification rate, %

Indicators of electricity sector Indicators 2002 2012 Var.%. 2002-2012

Instaled Capacity (kW) 79.032 155.785 97,1Production (kWh) 181.156.727 370.832.297 104,7Coverage Rate (%) 53,0 96,0 81,1Peak load Demand (kW) 34.530 68.350 97,9Per capita Consunption (kWh) 350,9 700,0 99,5Per capita production (kWh) 411,5 731,6 77,8Energy sent to grid (kWh) 154.463.047 354.709.910 129,6Energy loss (kWh) 37.282.844 97.256.547 160,9Black-out (nº) 49 29 -140,2GDP (bilion CVE) 19.468 36.208 86,0Electricity Clients (nº) 54.485 138.446 154,1Electricity price (CVE/kWh) 14,87 33,03* 122,1Gasoil imported (CVE) 1.630.948.965 4.950.341.735 203,5Gasoil price (ECV/Kg) 28,4 82,7 190,9Fuel oil Imported (CVE) 300.204.860 2.432.322.027 710,2Fuel oil price (ECV/Kg) 19,2 48,7 153,4

BUT: A Strong dependence on fossil fuels for electricity generation

4,3 M W

0,05 M W

0,02 M W

0,16 M W

0,05 M W

2,8 M W

0,05 M W0,02 M W

0,02 M W

0,05 M W0,02 M W

11 M W

7,4 M W0,3 M W

0,9 M W

10,4 M W

6,8 M W

2,8 M W

4 M W4 M W

0,17 M W

5 M W

26 M W

0,8 M W

0,06 M W1,34 M W

2,1 M W

1,4 M W1,5 M W

1,56 M W

4,5 M W

0,08 M W

0,39 M W

0,03 M W2,6 M W

0,08 M W0,04 M W

2,5 M W

0,9 M W

5 M W

0,6 M W

Brava1,65 MW

Fogo4,3 MW

Santiago46,2 MW

Maio1,5 MW

Boavista5 MW

São Vicente19,2 MW

São Nicolau2,7 MW

Santo Antão7,2 MW

Sal20,3 MW

100%

100%

60%40%

100%

100%

55%

33%

10%

2%

84%

11%5%

2%

47%

40%

11%

Pot ênciaMW

0 - 12 - 34 - 5

6 - 10

11 - 13

14 - 18

19 - 30

Eól ica

Solar

Diesel

Fuel

Diesel + Fuel

Tecnologia

Rede 20 kV

0,15 M W

2%

98%

FROM THIS UNSUSTAINABLE SITUATION

IN THE PAST - 2009/2010

7

To a sustainable situation based on renewable energy sources

0%

10%

20%

30%

40%

50%

60%

2001 2005 2009 2011 2020

25%

50%100 %

2,2%

Associated to an economic transformation and societal modernization based on:

n In the short to medium term:q Maintain economic

growth while keeping inflation low

q Reduce unemployment to single digit

q Reduce poverty rate below the MDG-Millennium Development Goals level

q Lay the foundation to expand the productive base of the economy

n In the medium to long-term: q Consolidate the market

economy led by the private sector

q Modernize our society and institutions

q Reform the state and invest in e-governance innovations

q Construct a nation that is globally competitive

Situated near the Sahara desert and pounded by trade winds, Cape Verde has a good renewable energy potential

n Cape Verde constitutes a potential natural laboratory for renewable energy sourcesq Geo-strategic locationq Proximity to the

African marketq Large & diverse

natural energy sources

Renewable Energy Potential

Waves MediumCurrents HighBiomass LowGeothermal MediumHydro LowPV HighSolar Thermal HighWaste to Energy MediumOTEC HighWind High

.

.

.

Energy Storage

Capacity Building

OUR VISION in the energy sector is based on:

Saving 100 % on imported fuel, Building an high efficiency agriculture, Building a modern cooling logistics for fishery and vegetables, Building a modern engineering

and training society based on Renewable Energy

VISIONARY, AMBITIOUS but FEASIBLE

Large renewable energy potential

!(!(!(!(!(

!(

!(

!(

3 MW

17.85 MW

1.7 MW

4 MW

3,5 MW

2.5 MW

0,6 MW

2.55 MW

10 MW

10,2 MW

7.5 MW

3,5 MW

12.75 MW

10 MW

11.05 MW

11.05 MW

3,5 MW

20 MW20 MW

5 MW

20 MW

1 MW

14,45 MW

1 MW1 MW

1,3 MW 5,95 MW

7,65 MW

3,4 MW

12,75 MW

18,7 MW4,25 MW

5,1 MW

6,8 MW5,95 MW6,8 MW

3,4MW

25 MW25 MW

17 MW

20 MW30 MW 40 MW

35 MW15 MW

30 MW

1 MW

1 MW

1 MW

14,45 MW

2,55 MW

15 MW

7,65 MW

5,95 MW

2,55 MW4,25 MW

3,5 MW

20 MW5,95 MW5,95 MW

11,05 MW 15,3 MW

6 MW

10,3 MW

5,95 MW

0,3MW

15 MW

7,65 MW

BravaEólico 6 MW

Solar 1,3 MW

FogoEólico 19,6 MW

Solar 4 MWGeotermia 3 MW

SantiagoEólico 76,5 MWSolar 243 MW

RSU 5 MWHídrica 60 MW

MaioEólico 14,5 MW

Solar 3 MW

BoavistaEólico 22,95 MW

Solar 30 MWMarítima 3,5 MWSão Vicente

Eólico 26,35 MWSolar 7,5 MWRSU 2,5 MW

Marítima 3,5 MWHídrica 10 MW

São NicolauEólico 15,8 MW

Solar 2 MW

Santo AntãoEólico 36 MWSolar 10 MW

Marítima 3,5 MW

SalEólico 45,9 MWSolar 17,5 MW

Marítima 3,5 MW

More than 600 MW renewable energy projects

studied

ZDER – RENEWABLE ENERGY DEVELOPMENT ZONES

Fonte: Gesto Energia

Lower Power Production Cost

+ 72,5 % since2009

+ 73,5 % since2009 (type 380)

2012: 390 €/MWh

2012: 260 €/MWh

source:Plano Energético Renovável

14

€500M additional investment required until 2020

€M

Source: Gesto Analysis

Investments in electricity sector (2012-2020)

Support from partners and international

institutions will continue to be

required to make the 2020

vision come true

50% R.E is ambitious and unique in Africa but most likely, not sufficient!

• Costs for imported fuel in 2020 still enorm and not at all safe.

• Role model will be very short lived because 50% is technically possible and easy to achieve.

• 100% demands more engineering intelligence thus providing more chances for an education based society.

• 100% creates huge surplus energy work which must be used in new consumers.

• Much higher investment will flow into CV.• More Carbon trading options

16

For this reason, Cape Verde has already started studying in 2012 for the scenario

100 % RE in 2020

17

100% RE is a Big Challengesn 100 % are by far achievable by existing

potentials but we faces big challenges:n grid capacityn grid management n storage capacityn high investments for power plants, grid,

storage and grid management

n 100 % are feasible and cost-effectiven strongly reduced demand for fuel and diesel.

For Cabo Verde RE is the option for the future

• Saving 100 % on imported fuel in the long run byusing a small part of the RE potentials

• Building an high efficiency agriculture based on water turned RE!

• Building a modern cooling logistics for fishery andvegetables based on RE

• Building a modern engineering and training societybased on RE

19

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X % Renewable EnergyMeeting Future Energy Demands with RenewableNew intelligent and regional value adding Consumer

100% Water powered by 100%REDomestic Production and Management of Water SupplyMeeting Basic Human Needs

100% Social Participation and FinanceInvesting in Cape Verde for Cape Verde

100% Integrated Circular Economy Approach

New Industrial Ecology ConceptsNew sustainable Sanitation and Waste ManagementNew forms of agriculture with additional access to irrigation waterNew forms of craftsmen-shipExport know-how to other African State

Concept: 100% Regional Added Value

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„Investment“ Plan: RE Plan 2011 (50%)

§ New power production capacity until 2020§ Plus 50% capacity planned for thermal units

30% Investment = 50% Power Capacity:Sounds rational?!

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Future Cost Structure of „Investment“ Plan (per KW / 20 years)

Investment 3.406 €/kW 2.212 €/kW 1.066 €/kW 1.066 €/kWinterest 5 % 5 % 5 % 5 %duration 20 a 20 a 20 a 20 a annual cost 273 €/a 177 €/a 86 €/a 86 €/afinancial cost 5.466 €/kW 3.550 €/kW 1.710 €/kW 1.710 €/kW

operation & maintenance 2 % 5 % 5 % 5 % annual cost 68 €/a 111 €/a 53 €/a 53 €/aoperation cost 1.362 €/kW 2.212 €/kW 1.066 €/kW 1.066 €/kW

service time 1.745 h/a 3.056 h/a 6.000 h/a 6.000 h/aefficiency 30 % 30 %fuel energy density 10 kWh/l 10 kWh/lfuel cost (actual) 0,71 €/l 1,09 €/l increase rate 15 %/a 8,5 %/a annual cost (actual) 1.420 €/a 2.180 €/atotal fuel cost 0 €/kW 0 €/kW 148.246 €/kW 108.238 €/kW

PV Wind Fuel Diesel

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§ Development of future power expenditure§ Increase in demand : 7,8 %/a** § Increase in fuel cost: diesel 8,5%/a*, heavy fuel 15 %/a*

Assumptions:* Extrapolated from

historic values 2004-2012

** derived from demand 2020

Future Risks of „Investment“ Plan

What about GHG?

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Consequence from 50%-Scenario

50% Fossil Energy

Production =

75% of the Total

Lifecycle Expenditure!

=+800% of GHG

Emissions!

Assumptions

PV 3.400 €/kWWind 2.200 €/kW

Thermal Group 1.000 €/kWEfficiency 30 %Fuel Cost (act.) 0,71 €/lDiesel Cost 1,09 €/lIncrease rate 15 %/a

8,5 %/a

Electr, Prod. 300 ® 700 GWh/aRE 20 ® 50 %Timeframe 2012 ® 2020

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Investment Plan

§ Electricity production costAssumptions

PV 3.400 €/kWWind 2.200 €/kW

Thermal Group 1.000 €/kWEfficiency 30 %

Fuel Cost (act.) 0,71 €/lDiesel Cost 1,09 €/lIncrease rate 15 %/a

8,5 %/aService Time 6.000 h/a

Life Cycle 20 a

PV price is decreasing more than 20%/year

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Exponential Growth in Expenditures for Fossil Supply

If we extrapolate the predicted increase in energy demand (7.8%/a) with a continuous price increase for fossil fuels (10%/a) the total imports costs for fossil fuel carrier will increase by over 20 times in the next 20 years. Even if the prices of fossil fuels are set to be constant the total import expenditure will increase by a factor of 4 due to the increasing energy demand.

Absolute savings (100% scenario) 110 MW wind and 70 MW photovoltaic

And ~ 1,2 billion Euros of Investment to be performed through the creation of an investment fund

Assumptions

PV 3.400 €/kWWind 2.200 €/kW

Thermal Group 1.000 €/kWEfficiency 30 %

Fuel Cost (act.) 0,71 €/lDiesel Cost 1,09 €/lIncrease rate 15 %/a

8,5 %/aService Time 6.000 h/a

Life Cycle 20 a

Savings by 100% Scenario over Lifecycle

0

2 0 0 . 0 0 0 . 0 0 0

4 0 0 . 0 0 0 . 0 0 0

6 0 0 . 0 0 0 . 0 0 0

8 0 0 . 0 0 0 . 0 0 0

1 . 0 0 0 . 0 0 0 . 0 0 0

1 . 2 0 0 . 0 0 0 . 0 0 0

1 . 4 0 0 . 0 0 0 . 0 0 0

1 . 6 0 0 . 0 0 0 . 0 0 0

1 . 8 0 0 . 0 0 0 . 0 0 0

2 . 0 0 0 . 0 0 0 . 0 0 0

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0

year of l i fecycle

€/a

cumulated savings over 20 years: 13,4 billion €

100% Renewables = x% GHG abatement• 100% RE electricity supply (500-100 GWh/a) equals to min. up to 12.000.000

ton CO2e / 20years (Fossil Fuel Switch) – Assumption 1.2 kg CO2e / kWh (in 2011) declining to 0.1 CO2e / kWh in 2020

• 100% RE Water Supply (25.000m3/day/20years) equals to min. 1.250.000 ton CO2e / 20years (Fossil Fuel Switch)

• 100% Waste-to-Energy Recovery equals to min. 1.050.000 ton CO2e / 20years (Avoided LFG) – Assumption 100to/day and unmanaged landfills

• CONCLUSION: If per ton of CO2e reduction a ERPA of 10EUR/ton could be established, up to 15% of the initial investments could be backed.

©2010 Institut für angewandtes Stoffstrommanagement (IfaS)Potenziale erkennen! Prozesse optimieren! Mehrwert schaffen!

Levelized Cost of Energy: Average for all Islands

©2010 Institut für angewandtes Stoffstrommanagement (IfaS)Potenziale erkennen! Prozesse optimieren! Mehrwert schaffen!

Macro-Economic Effect

Assumptions• Demand

demand of 2020(constant)

• Fuel coststarting with fuel cost of 2012

• HFO 180cost 0,73 €/kgincrease 10,3 %/a(period 2002-2012)

• Dieselcost 0,91 €/lincrease 10,9 %a(period 2002-2012)

Keeping current trends

©2010 Institut für angewandtes Stoffstrommanagement (IfaS)Potenziale erkennen! Prozesse optimieren! Mehrwert schaffen!

ROAD MAP to 2020

Short Term Objective until End of 2014: Detail Engineering

Concepts and implement first

Mid Term Objective until End of 2017: Installation of new renewable energy

production and short-term storages

at all islands.

Long Term Objective until End of 2020:

Installation of seasonal storages

and additional renewable energy production sites

©2010 Institut für angewandtes Stoffstrommanagement (IfaS)Potenziale erkennen! Prozesse optimieren! Mehrwert schaffen!

ROAD MAP to 2020: necessary conditions

• Careful considerations have to be performed for each of the islands.Strategies shall cover the utilization of oversupply by dispatchable loads.

• Implementation phase requires strong governance to follow a systemicapproach covering supply and grid related issues jointly.

• Step-by-step implementation has to be developed making use of existingfuel driven generators which can play a vital role as long term (seasonal)storage device in a transition phase while related constructions are on theway. Even as backup they are valuable assets.

• Grid stabilizing by the introduction of battery storages has to behighlighted as one of the first steps for implementation at short term. As amatter of course the design of storage hardware and control shallconsider future enhancements to 100 % regenerative supply. Thusrenewable production from existing photovoltaic systems and windturbines may be enhanced to their capabilities without the need fortoday’s power reductions.

©2010 Institut für angewandtes Stoffstrommanagement (IfaS)Potenziale erkennen! Prozesse optimieren! Mehrwert schaffen!

Institutional Framework

100%+X% Concept

Energy MixWind / Solar/Waste

StorageShort/Long Term

Use Oversupply

Capacity Building/ Research

Fossil Fuel: Business as usual

n.

Government of Cape Verde

100% REHolding

Cape Verde

100% State OwnedHolding

National CE Fond for Cape Verdeans100% RE

Investment

Company

15-20%EQUITY

Dividends

Circular Economy Foundatio

n

“DividendCapital”

Equity Interest& Annuity

CV Circular Economy Research & Education

Social, Community and Efficiency Projects

Social Capital &Funding

IFI & FDISovereign

Wealth Funds &RE Funds

Equity Mezzanine(Preferential Interest)

Equity Capital(Limited Interest( >5% < 10%)

CE Project

s

CE Project

s

100% RE

Projects

Project Development

and Equity

Corporate Tax

Intellectual Property Right

Application of CE Technology

Research Results

Donors & International Foundation

Debt Capital(Concessional & Market-based

Interest

Challenging Conclusions• 50% RE is ambitious and unique in Africa but most likely not

sufficient!– Costs for imported fuel in 2020 are still enormous and fuel

supply not at all safe.• 100% demands more engineering intelligence thus providing more

chances for an education based society• 100% creates huge surplus energy which must be used in new

industry/consumer chains• Much higher investment must be organized• Higher technical complexity „Developing countries cannot do

this…“

100% Support: Education and Capacity Building

• Technical Transformation towards 100% Renewable Energy requires:– New academic courses and programs– Non-Academic education (Craftsmanship)

• Continuous scientific research actions• Sensitisation and environmental awareness

campaigns (communication strategy)

• Marketing strategy for education for the ECOWAS region

Cape Verde as a training hub, both theoretical and practical

100% RE Cluster : Additional requirements for Technology Provider

• Delivery of technical expertise for fixed time period after sales:

– Training in Operation & Maintenance– Training in new project site development– Training in engineering design– Training in financial “engineering”– Training in Carbon Management and Trading

• Vocational Training Courses with Certificate Program on job• New university-based teaching modules

– New University Cooperation‘s

Final Conclusion• 100 % are by far achievable by existing potentials• 100 % will cause challenges:

– grid capacity– grid management – storage capacity– high investments for power plants, grid, storage and grid

management – high prices for regulating energy

• 100 % are feasible and cost-effective– strongly reduced demand for fuel and diesel

• continuously – allow for investment in grid infrastructure and management

• one time

38

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Cape Verde and

Let´s get it done, jointly!