Cabeolica Wind Farm Project
About the project
The US$90 million 25.5 MW Cabeolica wind farm is based in Cape Verde and is developed, owned and operated by Cabeolica SA, the project’s Special Purpose Vehicle. AFC is the lead investor in Cabeolica SA and works on a Public Private Partnership (PPP) basis with the Government of Cape Verde and Electra, the national power utility.
The project entails the construction of 30 wind turbines on four out of the nine inhabited islands of the mid-Atlantic archipelago. The aim is to provide an economic, environmentally safe, scalable and sustainable source of renewable energy for economic development.
A small island state such as Cape Verde lacks the requisite expertise in infrastructure project finance, and this was the country’s first Independent Power Project (IPP). It required innovative project financing, technical and financial structuring, extensive stakeholder consultations and patient dialogue to achieve financial close and successful project implementation. The transaction also required a specialized sponsor group, committed to the long term success of such a landmark project in the African infrastructure and renewable energy space
AFC engaged with the founding sponsors towards the end of the project development phase in June 2010, assuming the role of a co-developer to drive the transaction to successful financial close. With the support and participation of AFC, equity financial close was achieved a few months later in August 2010. The Corporation then participated actively in negotiations with the lenders and the loan documents were signed with the EIB and AfDB shortly thereafter in December 2010, after which the contractor mobilized to the project site.
The Cabeolica project is financed with equity from AFC, Finnfund, InfraCo Africa, Electra and the Government of Cape Verde. Debt financing is provided by the European Investment Bank and the African Development Bank.
The project provides Cape Verde with:
- More than 20% of the country’s power needs – the project adds 25.5 MW n to national installed capacity and injects over 80.8 GWh of electricity annually into the island nation’s grids
- A mix of energy sources, with wind power serving to displace much more expensive imported fuels (diesel and heavy fuel oil). The project saves an estimated US$12m per annum in annual foreign exchange savings as a result
- An economical, green and sustainable source of renewable energy to power economic development
- Significant savings on expensive imported fuel and carbon credit revenues under the ‘Clean Development Mechanism Initiative’
- Direct and indirect employment and capacity development for Cape Verdeans through technical knowledge transfer
- Potential complementary private and/or donor investment and assistance to the power sector and rest of the Cape Verdean economy
First in its field
The Cabeolica project is the first commercial scale PPP wind farm in Sub-Saharan Africa. It is also Cape Verde’s first IPP.
Cabeolica won recognition in the International Finance Corporation Emerging Partnerships top ten PPPs in Africa.