Investing in Renewable Energy in Cape Verde: Regulations, Tax Incentives and Market Opportunities 2025-2026

Why Cape Verde is West Africa's New Renewable Energy Hub

Cape Verde has established itself as a regional leader in the energy transition, with ambitious goals of reaching 50% of renewable electricity by 2030 and 100% by 2040. The archipelago is not just a consumer of green technology, the government wants to turn it into producer and exporter of renewable energy for West Africa, including green hydrogen and sustainable desalinated water.

The national strategy has already surpassed the intermediate target of 30% of renewable penetration by 2025, driven by exceptional natural resources: identified technical potential of more than 3,000 MW in solar energy and 500 MW in wind energy.

“Cape Verde can become a regional centre for the production and export of renewable energies, taking advantage of abundant solar and wind resources” — UNCTAD Report 2025

Regulatory Framework Updated: What Changed in 2025

Cape Verdean legislation has evolved significantly to create a predictable and attractive legal environment:

Law no. 52/X/2025 - New Production and Distribution Framework

Approved in April 2025, this law states:

• Financial compensation mechanisms for municipalities that host renewable energy projects
• Clear rules for managing public lighting costs integrated with renewables

Decree-Law no. 54/2018 - Licensing and Access to the Network

The main regulatory instrument for independent producers, providing:

• Allocation of reception capacity in the network through transparent public tenders;
• Independent production allowed in mini and medium-sized projects (secondary islands);
• Microgeneration associated with self-consumption, avoiding injection into the public grid.

Resolution 16/2025

It delegates powers to the National Water and Sanitation Agency for integrated renewable energy projects, speeding up approval processes.

Exclusive Tax Incentives: The 2026 Budget That Will Attract Investors

The Cape Verdean government has drastically reinforced tax benefits for State Budget 2026, presented in February 2025:

Total Import Exemptions

• Exemption from Customs Duties (DI), VAT and Excise Duty (ICE) on the import of photovoltaic panels and inverters for electricity production
• Wind power equipment is also eligible for exemption from customs duties

Income tax reduction (IRPC)

• Reduction of up to 50% in the IRPC during the first five years of operation for renewable energy projects
• New reduced corporation tax rate: 20% (previously 21%), with a rate of 16% applied to the first 50,000 euros of taxable income for SMEs

Tax Deductions for Sustainability

• Deduction of up to 50% of tax on reinvested profits in projects that promote environmental sustainability
• Deduction under sections 40% to 50% for expenditure on Research and Development (R&D) in green technologies

Special Unified Regime

Companies in the sector may opt for a a flat rate of 4% on gross sales volume, replacing VAT, stamp duty and other levies

Investment Opportunities by Segment

1 Photovoltaic Solar Energy: The Most Immediate Potential

With solar radiation levels higher than the European average, the solar sector offers:

• Competitive return on investment when financed through credit facilities concessional loans
• Ongoing projects: expansion of the Chã das Caldeiras Solar Power Station (Fogo) and the repowering of the Palmarejo Power Station (10 MW)
• Microgeneration sector: installation of residential and commercial panels with andself-consumption strategy

2. Wind Energy: The Consecrated Experience

The project Cabeólica, a 10-year public-private partnership, demonstrates the viability of the model with 30 turbines installed on the islands of Santiago, Sal, São Vicente and Boa Vista. (Macau Forum)
New opportunities include:

• Turbine repowering using more efficient technology
• 20-year power purchase agreements (PPAs) guaranteed by Electra

3. Energy Storage: The Next Frontier

To achieve 100% from renewable sources, the country urgently needs storage technologies:

• Santiago Pumped Storage Project: a pure pumped-storage hydroelectric power station (around 20 MW) with a budget of approximately 40 million euros
• Lithium battery systems: ongoing international tenders for facilities in São Vicente and Sal
• Technologies for smart grids and real-time monitoring

4. Green Hydrogen and Energy Exports

UNCTAD has recommended that Cape Verde carry out feasibility studies for the production of green hydrogen, positioning itself to export renewable energy to other African countries via the Continental Free Trade Area.

Active Public Tenders: Enter the Market Now

The Ministry of Industry, Trade and Energy (MICE) has the following open calls for applications: Table

How to Invest: A Practical Roadmap for Companies and Entrepreneurs

Step 1: Legal structuring and registration

• Set up a company under the public-private partnership (PPP) or independent producer
• Simplified registration via the “Empresa no Dia” programme”
• Model definition: concession, PPA (Power Purchase Agreement) or independent production

Step 2: Technical Feasibility Analysis

• Studies of solar and wind energy potential at a specific site
• Assessment of proximity to the national electricity grid and connection capacity
• Environmental impact assessment (mandatory for projects exceeding certain thresholds)

Step 3: Participation in public tenders

• Portal monitoring energiasrenovaveis.cv
• Submission of technical and financial proposals in accordance with Decree-Law 54/2018

Step 4: Raising finance

• Concessional credit facilities: up to 300 million euros available for renewable energy projects
• World Bank: The REIUP (Renewable Energy and Utilities Improvement Project) project, with funding of US$13.30 million, was approved in January 2026
• African Development Bank: 19.6 million euros for wind power and energy storage
• Risk Mitigation Facility: a government body that will raise $108 million in private capital

The Future: Cape Verde as a Clean Energy Exporter

The government’s vision goes beyond self-consumption. By 2050, the transition to 100% renewable energy will generate:

• Savings of 1.8 billion dollars on fuel imports (at a discount)
• A reduction of 225,000 tonnes of CO per year₂
• 800 new direct and indirect jobs created by 2030
• Potential for eExport of renewable energy and desalinated water to mainland Africa

Conclusion: The Time Is Now

Cape Verde offers a mature legal framework, generous tax incentives and international funding available for renewable energy projects. The window of opportunity is particularly open for:

• Investors in storage infrastructure (batteries and water pumping)
• Solar and wind project developers (independent or under a PPP)
• Green technology companies who might set up a solar panel factory in the archipelago (the government’s aim is to create an industrial cluster)

Do you need specialist support to plan your investment in renewable energy in Cape Verde?

A S&D Consultoria, Lda. It offers a comprehensive advisory service covering company formation, regulatory feasibility analysis, the preparation of tenders for public procurement contracts, and tax optimisation for clean energy projects. Contact us and turn Cape Verde’s renewable energy potential into your next success story.