Legislation and Opportunities for Renewable Energy Production and Sales Businesses in Cape Verde

The energy transition in Cape Verde has been a strategic priority, with the country setting ambitious targets for the integration of renewable energy into its energy mix. By 2030, the aim is to generate 50% of electricity from renewable sources, with an interim target of 30% already exceeded by 2025, as reported by Island Express. This commitment is reflected in public policies, tax incentives and specific regulations that promote investment in solar, wind and other clean energy sources.

Cape Verdean legislation, such as the Law No. 52/X/2025, introduced in April 2025, sets out conditions for the generation and distribution of electricity, including financial compensation mechanisms for local authorities and rules for the management of street lighting costs. In addition, the Resolution 16/2025 delegates powers to the National Water and Sanitation Agency for renewable energy projects, thereby strengthening the institutional framework for the sector’s development.

Cape Verde offers a favourable environment for entrepreneurs interested in the production and sale of renewable energy. The archipelago’s privileged geographical location, with abundant sunshine and constant winds, creates ideal conditions for harnessing solar and wind energy. Furthermore, the government has been promoting public-private partnerships and financial incentives, such as those provided for in the National Programme for Energy Sustainability (PNSE), to attract investment and foster technological innovation in the sector.

To set up a business producing and selling renewable energy in Cape Verde, it is essential to understand the legal and regulatory framework, as well as to identify market opportunities. Projects such as the Santiago Pumped Storage scheme and the modernisation of the electricity grids, described by the Island Express, demonstrate the sector’s growth potential and the need for innovative solutions to meet the growing demand for clean energy.

This report examines the relevant legislation, the incentives available and the practical steps involved in setting up a sustainable and competitive business in the renewable energy sector in Cape Verde, with a focus on the generation and sale of wind power.

Legislation and Regulations Governing Wind Power Generation in Cape Verde

Legal Framework and Licensing for Wind Power Generation

In Cape Verde, independent electricity generation, including wind power, is regulated by the Decree-Law No. 1/2011, as amended by the Decree-Law No. 54/2018. This scheme sets out the rules for licensing, access to the transmission and distribution networks, and incentives for renewable energy projects. Independent generation is defined as the generation of electricity by authorised entities, with the electricity fed into the national grid. (Renewable Energies Cape Verde)

Licensing and Network Access

The licensing process requires interested producers to obtain a specific authorisation, which includes:

Technical and Environmental Feasibility Study: Assessment of the project’s environmental and technical impacts.
Simplified Capacity Allocation Tender: Held annually, it enables the allocation of transmission capacity within the electricity grid for the following two years. (Renewable Energies Cape Verde)
Production and Operation Licence: Issued following approval of the project and compliance with technical standards.

The legislation also provides for the possibility of allocating reception capacity upon direct request, provided there is availability on the network.

Tax Incentives and Benefits for Wind Power Projects

The Cape Verdean government offers significant tax incentives to promote investment in renewable energy, including wind power. These incentives are in line with the objectives of decarbonisation and increasing the share of renewable sources in the country’s energy mix.

Tax Exemptions and Reductions

Customs Duty Exemption: Equipment and materials for renewable energy projects are exempt from customs duties.
Reduction in Corporation Tax (IRPC): Renewable energy projects may benefit from reductions of up to 50% in IRPC during their first five years of operation. (Consultancy in Cape Verde)
Unified Special Tax Regime: Applicable to companies operating in the renewable energy sector, simplifying taxation and reducing administrative costs.

Financial Support and Partnerships

In addition to tax incentives, the government promotes public-private partnerships (PPPs) for the development of infrastructure and large-scale projects. These partnerships include international funding and technical support from organisations such as the ALER – Lusophone Association for Renewable Energy. (ALER)

Public Competitive Examinations and Allocation of Positions

Cape Verdean legislation stipulates that feed-in capacity on the electricity grid is to be allocated through public tenders. These procedures are regulated by the Decree-Law No. 54/2018 and involve several stages, such as:

Announcement of the Competition: Announcement of available capacity and technical requirements.
Submission of Proposals: Interested companies submit their detailed proposals.
Technical and Financial Assessment: Analysis of the tenders based on criteria relating to technical feasibility, environmental impact and financial capacity.
Negotiation and Allocation: Selection of the winners and signing of the contracts.

Tenders are currently underway for the installation of energy storage systems on several islands, such as São Vicente and Boavista, to complement the wind power projects. (Renewable Energies Cape Verde)

Decarbonisation Targets and Government Policies

The Cape Verdean government has set ambitious targets for the energy transition, aiming to achieve 50% of renewable energy in the electricity mix by 2030 and 100% by 2040. Wind power plays a central role in this strategy, representing one of the most promising sources due to the archipelago’s favourable climatic conditions. (ALER)

Featured Projects

Expansion of the Cabeólica Wind Farm: This project, in partnership with the government and the company Cabeólica, aims to double the country’s wind power generation capacity. (ALER)
Santiago Water Pumping Station: It complements wind power generation by increasing energy storage capacity, thereby ensuring greater stability in the electricity grid.

Procedures for Setting Up a Wind Power Generation Business

Entrepreneurs interested in investing in wind power generation in Cape Verde should follow these steps:

1. Choice of Legal Structure

The most common legal form for companies in the renewable energy sector is the Private limited companies, which offers flexibility in management and limits the partners’ liability. (Consultancy in Cape Verde)

2. Registration and Licensing

Commercial Register: This can be done via the “Empresa no Dia” service, set up by the Decree-Law No. 9/2008, which simplifies the process of setting up companies.
Environmental Licence: Required for all wind energy projects, as stipulated by Cape Verdean environmental legislation.

3. Funding and Partnerships

Sources of Funding: These include local banks, venture capital funds and crowdfunding platforms.
Strategic Partnerships: Partnerships with international companies and organisations such as the Portuguese-German Chamber of Commerce, which supports the development of wind power projects in the country. (ALER)

4. Submission to the Open Tender

Interested parties must prepare a detailed proposal, including technical and financial studies, in order to take part in the capacity allocation tenders.

5. Implementation and Operation

Following approval, the project moves on to the implementation phase, which includes the installation of wind turbines and their integration into the national electricity grid.

Considerations on Sustainability and Environmental Impact

Cape Verdean legislation requires all wind energy projects to meet strict sustainability criteria, including:

Environmental Impact Assessment (EIA): Identification and mitigation of negative impacts on the local ecosystem.
Continuous Monitoring: Regular reports on the project’s environmental and social performance.

These requirements are essential to ensure that the growth of the renewable energy sector is aligned with the country’s sustainable development goals. (Renewable Energies Cape Verde)

Business Opportunities in Renewable Energy in Cape Verde

Strategies for Public-Private Partnerships (PPPs) in the Energy Sector

Public-private partnerships (PPPs) have been a key strategy for the development of renewable energy projects in Cape Verde, enabling risk-sharing and the attraction of private capital. Unlike the existing content on tax incentives and public tenders, this section focuses on the different types of PPPs and the specific opportunities available to investors.

Available PPP Models: Cape Verde has adopted concession models and power purchase agreements (PPAs). One example is the 20-year contract between Cabeólica and Electra, which guarantees the purchase of electricity generated by the wind farms. (Cabeólica Press Release)
Priority Areas for PPPs:

Energy Storage: Projects such as the battery projects in Santiago and Sal, which are essential for stabilising the electricity grid and storing surplus energy, are ideal for PPPs. (Government of Cape Verde)
Network Infrastructure: The modernisation of the electricity grid, such as EDEC’s investment to reduce losses of 31.4% in Santiago, presents an opportunity for private companies. (Have)

Benefits of PPPs: These partnerships offer contractual guarantees, access to international funding and tax incentives, as well as promoting technology transfer.

Development of Solar and Wind Energy Projects

Although the existing content refers to wind power as central to decarbonisation targets, this section explores new opportunities in hybrid and solar energy projects.

Solar and Wind Potential: Cape Verde has an identified technical potential of over 3,000 MW for solar power and 500 MW for wind power. (Master Plan for the Electricity Sector)
Hybrid Projects: The integration of solar and wind power systems with energy storage is a growing trend. For example, the expansion of the Santiago wind farm includes batteries that improve the efficiency and stability of the grid. (ALER)
Opportunities for Small-Scale Producers: Decree-Law No. 54/2018 allows for independent energy production, creating opportunities for small businesses to develop local projects. (Renewable Energies Cape Verde)

Storage Technologies and Energy Efficiency

Whilst the existing content covers battery installation, this section examines emerging technologies and opportunities for technology companies.

Storage Solutions: Lithium batteries and green hydrogen technologies are promising areas. Cape Verde has already installed batteries with a capacity of 9MW/5MWh on Santiago and 6MW/6MWh on Sal. (Government of Cape Verde)
Energy Efficiency in Distribution: The modernisation of the electricity grid – such as EDEC’s plan to reduce technical and non-technical losses in excess of 24% – presents an opportunity for companies specialising in energy efficiency solutions. (Have)
Technology Partnerships: Technology companies can work with the government and local operators to implement smart energy management systems.

International Finance and Investment

This section supplements the existing content on tax incentives, focusing on sources of international funding and opportunities for foreign investors.

Support from Financial Institutions: The African Development Bank (AfDB) has approved €19.6 million for the expansion of Cabeólica, demonstrating the interest of international institutions in financing renewable energy projects in Cape Verde. (Island Express)
Private Investment Funds: The involvement of organisations such as A.P. Moller Capital in the Cabeólica project highlights the role of private investors in the sector. (Cabeólica Press Release)
Regional Partnerships: Cape Verde could explore agreements with neighbouring countries to export renewable energy, capitalising on its strategic location.

Training and Human Resources Development

Whilst legislation and incentives are essential, the development of local skills is crucial to sustaining the sector’s growth.

Technical Training: Schemes such as Cabo Verde Digital can be adapted to include training in renewable energy, thereby promoting the development of local skills. (Consultancy in Cape Verde)
Partnerships with Academic Institutions: Universities and research centres can collaborate with businesses to develop innovative solutions and train qualified professionals.
Local Jobs: Projects such as the expansion of the Santiago wind farm create direct and indirect employment opportunities, contributing to local economic development. (ALER)

Practical Steps for Setting Up a Business to Generate and Sell Renewable Energy in Cape Verde

Identification of Location and Natural Resources

Choosing a site for a renewable energy project is one of the most critical steps. Cape Verde has significant potential for solar and wind energy due to its favourable geographical location, with consistent winds and high levels of sunshine. To identify the best site, it is necessary to:

Energy Potential Studies: Technical assessment of climatic and geographical conditions, such as solar irradiance and average wind speed. These studies are essential for determining the feasibility of the project. (ALER)
Analysis of Existing Infrastructure: Check the proximity of electricity networks and the capacity for connection to the national grid, as regulated by the Decree-Law No. 54/2018.

Financial Planning and Fundraising

Financing is a crucial factor in the success of a renewable energy business. Cape Verde offers tax incentives and opportunities for international financing that can be taken advantage of:

Tax Incentives: Equipment and materials for renewable energy projects are exempt from customs duties, and there are reductions in the Corporate Income Tax (IRPC) during the first five years of operation. (Consultancy in Cape Verde)
Public-Private Partnerships (PPPs): Concession models and power purchase agreements (PPAs) are common in Cape Verde. For example, the 20-year contract between Cabeólica and Electra guarantees the purchase of the electricity generated. (Cabeólica Press Release)
International Funding: The African Development Bank has approved funding of 19.6 million euros for wind energy and battery storage projects in Cape Verde. This type of support could be utilised by new investors. (AfDB)

Project Development and Licensing

Developing a renewable energy project in Cape Verde requires compliance with a number of regulatory and technical stages:

Preparation of Environmental Impact Assessments: As required by Cape Verdean environmental legislation, a detailed study must be carried out to assess the project’s environmental impacts. (ALER)
Licensing and Network Access: The licensing process involves obtaining a production and operation licence, as well as taking part in simplified tenders for the allocation of grid connection capacity. (Master Plan for the Electricity Sector)
Electricity Network Code: Decree-Law No. 31/2019 regulates the stable and safe operation of the national electricity system, enabling greater integration of renewable energy sources. (ALER)

Implementation of Technologies and Infrastructure

Selecting the appropriate technologies and building the necessary infrastructure are key stages in the implementation of the project:

Storage Technologies: The integration of battery systems, such as those deployed in Santiago and Sal, is essential for stabilising the electricity grid and storing surplus energy. (Government of Cape Verde)
Solar and Wind Farms: The construction of solar and wind farms must comply with the technical and safety specifications set out in the Electricity Grid Code. (ALER)
Energy Efficiency: Projects that promote energy efficiency, such as the modernisation of the electricity grid, are strongly encouraged. (Have)

Marketing and Business Expansion

Following the implementation of the project, it is necessary to establish strategies for marketing the energy produced and expanding the business:

Power Purchase Agreements (PPAs): Entering into long-term contracts with Electra S.A. or other buyers may ensure the financial viability of the project. (AfDB)
Export of Renewable Energy: Cape Verde has the potential to become an exporter of renewable energy to the region, creating new revenue opportunities. (Consultancy in Cape Verde)
Sustainability Initiatives: Promoting sustainable practices, such as the use of clean energy in tourism, can enhance a company’s image and attract new investors. (ALER)

This report provides a practical guide for entrepreneurs interested in investing in the renewable energy sector in Cape Verde, highlighting the necessary steps and the opportunities available in the country.

Conclusion

Research into the legislation and the process of setting up a business in the wind energy sector in Cape Verde highlights a favourable regulatory environment, with attractive tax incentives and ambitious government targets for the energy transition. Independent power generation is regulated by the Decree-Law No. 1/2011 and by the Decree-Law No. 54/2018, which set out the requirements for licensing, access to the electricity grid and participation in public tenders. In addition, the government offers exemptions from customs duties, reductions in the IRPC tax and incentives for public-private partnerships (PPPs), creating a favourable environment for domestic and international investors.

Key steps involved in setting up a business in this sector include choosing the legal structure and carrying out a simplified business registration via the programme “Company of the Day”, the carrying out of environmental impact assessments and participation in public tenders for the allocation of capacity on the electricity grid. The implementation of storage technologies, such as lithium batteries, and the integration of hybrid systems (solar and wind) are trends that enhance the efficiency and stability of the electricity grid, aligningwith the country’s decarbonisation targets, which aim to achieve 50% of renewable energy by 2030 and 100% by 2040.

There is a wide range of business opportunities, including small-scale projects for independent producers, strategic partnerships for large-scale infrastructure and the export of renewable energy. However, strict compliance with legal and environmental requirements, combined with securing international funding, will be essential to ensuring the success of these projects. Interested entrepreneurs should prioritise the preparation of robust technical proposals, explore the available incentives and establish partnerships with local and international institutions, such as the ALER, to maximise the impact and viability of your investments.