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The Pico Island is the largest of the central group of the Azores, formed by Terceira, Faial, Pico, São Jorge and Graciosa. It hosts Portugal's highest mountain also named Pico (2351m) and spectacular sceneries.

The site of the OWC plant was chosen due to the high energy levels on the Pico North coast, which in addition offers several "shoreline gully" rocky formations, which have a natural energy concentrating character. Cachorro, where the plant was built, offered a particularly well developed gully and at the same time suitable water depths in front of the plant and good access from local roads, as well as a nearby grid connecting point.

The interest from EDA in the construction of a plant in this place came back since the late 80s, but its concretisation was only possible with the EC funding initiating in 1992. One of the initial project ideas was to demonstrate the viability of producing electricity for a small grid, mainly because this type of plants can be particularly interesting for remote locations, like islands.

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