(mudar para versao portuguesa) From time to time Atlantico Weekly will focus on Cape Verde’s economic development and accompanying business opportunities. This time we take a look at the renewable energies sector. In a poll on Atlantico Weekly we asked our readers what they think are Cape Verde’s most promising business sectors. On September 23rd no less than 33% of voters had by then opted for tourism as the most promising sector of the country. Second place was reserved by them for renewable energies (solar and wind power), with 17% of all votes cast in this poll, and ahead of logistics, agribusiness, real estate and other sectors. That’s an interesting result and we would like to dig a bit further into this sector and its opportunities.
In our Cape Verde in 2030 we state that Cape Verde by 2030 may achieve 100% self sufficiency in renewable energies. That may seem too optimistic or unrealistic, but we have used official Cape Verde government goals as a basis for extrapolation. Earlier in 2012 the government officially launched the Sector Plan for Renewable Energies, with a target of 50 percent penetration of renewable energies in Cape Verde by 2020, which is expected to cost over 300 million euros. Several batches of funding have already been acquired from Cape Verde’s international partners: for further studies from Luxemburg or concrete projects from the EU (Monte Trigo) and from Japan and the African Development Bank for the general “Reinforcement of Energy Production, Transportation and Distribution Capacity on six Cape Verde islands”. Late March 2012 however, Abraão Andrade Lopez, Director General of the Ministry of Industry and Energy was quoted in saying that the country is currently running a study exploring how to achieve the full 100 percent renewable energy supply (SEM), which goes to show that even renewable energy strategies are renewable!
Cape Verde’s energy situation
Let’s step back a while from future visions and look and the state of Cape Verde’s energy sector today. The state utility company Electra, responsible for the supply of electricity to most Cape Verde’s citizens and companies, is in a sorry state. The country is plagued by many black outs, hurting both private homes and businesses. Electra-bashing has become the norm and it is understandable that the company gets the blame for the lack of stable energy supply. Investment in energy infrastructure is critical for the government’s economic transformation agenda. But a World Bank report of March 25, 2009 stated that the high cost and inadequate supply of electricity is without doubt one of the most important constraints to the economic development of the country. Since then Electra has not been able to provide stable energy supply, despite several improvements and changes in its policies and management.
Electra itself however has a different story to tell. It says many consumers illegally tap into its system and it has a backlog of many unpaid bills. Electra estimates that about 25% of the energy it sends across the grid is lost to theft, a figure that it reckons is even higher in Praia. In July 2012 the company’s CEO, Alexandre Fontes, said that Electra had filed more than 5,000 complaints with the courts regarding electricity theft (A Semana). That is bad news.
A lot of good ideas on how to fix these problems can be found here. Some of the ideas suggested in that article, like installing home meters, provide prepaid electricity and price differentiation on peak and non-peak hours are excellent and they do not need that much investment. It’s unclear however if those measures will ever solve Electra’s problems. The company’s reputation is so badly damaged in the eyes of citizens and politicians alike that it may be better to reform the company all together and change the name as well as its organizational structure. The latter could be done by dividing the company into regional companies, associated with the local municipalities and operating closer to consumers. Presently the state directly owns 63,35% of Electra’s shares and another 27,31% through the INPS, or Instituto Nacional de Previdência Social (a state owned social fund). The remaining 9,3% are owned by municipalities. A plan to split Electra into two companies (north and south) appears to be in the making, according to the Cape Verde press.
Consumers who get (more) influence on power supply might be more inclined to pay up for services and they would exercise some social control over neighbors that are illegally tapping electricity. But a public campaign might be needed as well, appealing to the patriotic duty of paying your energy bill and not stealing from public companies, in order to keep Cape Verde independent from more and expensive fuel imports. But this could only go hand in hand with a name change of Electra and more importantly, with improved services.
But the main challenges remain the stable supply of enough energy for all of Cape Verde’s citizens and companies and to cater to future needs caused by the expansion of the economy, especially in the tourism sector. It will be all hands on deck for Electra and its possible follow-ups. On top of that Cape Verde wants to focus on achieving at least 50% supply of energy from renewable sources by 2020.
So back to those visions. Cape Verde must make serious work soon of installing more wind, hydro and solar power plants all over the country if it wants to reach its goals in the years up to 2020. Small photovoltaic (solar), wind and hydro-electric plants are already operating on various islands and these projects can be expanded or copied elsewhere, all under the auspices of Electra and its successors. But a lot will depend on the flow of international funds to finance these projects to make the new renewable energies strategy come true.
So more has to be done. The country could significantly bring down its oil imports, which in theory are to grow anyway if the economy keeps on expanding in its present steady pace. The macro-economic benefits of this would be huge as less fuel imports would improve the country’s trade balance by the double digits.
What could consumers do meanwhile? It is still hard and expensive to have your own solar or wind generating project at home. Yet, the market would be big in Cape Verde for home installed solar panels or small windmills. Any local or visitor to the country understands the unique opportunity of using wind and sun for power supply. If a program would exist to stimulate home owners and companies to invest in their own small renewable power generator, everybody would win: the consumers would have a stable own supply of energy which in the long run would save them money, Electra would see its burden eased of providing everybody all the time and the macro economic situation of the country would improve as less fuel imports are needed. Those micro plants, based around individual consumers or groups of consumers (hamlets, neighborhoods, industrial sites, commercial buildings) could in due course be connected to the grid, so that in times of scarcity energy could be sold by them to Electra. This legion of consumer-producers could thus help rescuing and stabilizing national energy supply and assist with the development of the country, at no loss whatsoever to them. Some consumers might even make some money with it! All the government should do is help set up such a program and provide clear cut tax breaks to those enrolling and to companies willing to supply equipment. In the end even a fully integrated national grid may be set up by connecting various islands by cable.
So, we at Atlantico Weekly still believe in Cape Verde’s renewable energy strategy!
September 23rd 2012. All rights reserved by Atlantico Weekly.