Africa Energy Futures: Mauritius
Over the last five years, how has the energy mix changed, and what have been the key drivers?
In Mauritius, the primary energy requirements are met from a mix of imported sources (mainly petroleum products and coal) and local renewables. In 2020, 76.1% of the country’s electricity was generated from non-renewable sources: coal (39.5%), fuel oil and diesel (36.6%). The remaining 23.9% was obtained from renewable sources: bagasse (sugarcane pulp used as biomass fuel) (13.3%), photovoltaic (PV) (5.1%), hydro (4%), wind (0.6%) and landfill gas (0.9%). These figures represent a gradual growth in the share of renewable energy – particularly solar and hydro – in the country’s electricity generation over the last four years.1
Mauritius has encouraged the financing and development of PV power plant projects through both international competitive bidding and joint ventures between the local private sector and international companies. For example, the Henrietta solar farm that has been operational since February 2019 with a production capacity of 17.5 MW. There have also been several initiatives led by the Central Electricity Board (CEB), the public utility company, such as the installation of PV rooftop systems on 10,000 low-income households.
As regards institutional and regulatory changes, the government created the Mauritius Renewable Energy Agency (MARENA) under the MARENA Act 2015. MARENA is empowered, among other things, to oversee and promote the development of renewable energy in Mauritius, including research and innovation. In 2017, the CEB Act was amended to allow CEB (Green Energy) Co Ltd, whose function is to promote renewable energy, to participate in power projects without having recourse to public procurement.
What is the outlook for the energy and natural resources sector in the next five years? In particular:
Key policy decisions
In the 2021-22 budget, renewable energy has been identified as a new pillar for Mauritius’ economic growth. In light of the budget plan, the government has outlined its intention to take on board the following measures:
- Setting up a National Biomass Framework, remunerating bagasse at MUR3.50 per kWh for all planters.
- Investment by the CEB over the next three years of MUR5.3 billion in increased battery capacity up to 40 MW, gas-insulated switchgear substations and a 10 MW solar farm at Tamarind Falls, Henrietta.
- Request for proposal by the CEB to construct a MUR2.4 billion 40 MW wind farm.
- Carrying out a feasibility study on implementing offshore windfarms and mini hydro power plants and on the safe disposal of used solar panels and batteries.
- Incentivizing the use of electric vehicles by making purchases duty-free, reducing registration duty and road tax.
- Removing the 5% excise duty on electric vans of up to 180 kW used to transport goods.
- Allowing owners of electric vehicles to install a PV system not exceeding 10 kW to charge their vehicle and export any surplus to the grid.
- Purchasing 25 electric buses for the National Transport Corporation to renew its fleet.
Main policy challenges
A main goal of the government is to significantly increase (from 13% to 60%) the share of renewables in the energy mix. A primary challenge remains whether the existing national electricity grid has the capacity to take up the increased power generated from renewable sources. Indeed, the modernization of the country’s national electricity grid; for example, through the use of smart technologies, is a prerequisite to accelerate the uptake of renewable energy. Unless this issue is tackled by government, the promising measures announced in the budget above will not produce visible results.
Because renewable energy is not entirely waste-free, the lack of a proper and efficient framework to safely dispose of used solar cells, batteries and PV panels could potentially hamper the country’s goal towards achieving environmental sustainability.
Furthermore, and even though there have already been institutional changes in the energy sector recently, the proper expansion of renewable energy capacity will require further supporting policies to allow for fair and transparent development from tariff setting to technical adaptation of the grid.
Finally, a potential challenge remains as to whether the appropriate process and regulatory framework could be implemented without undue delays and ideally before the end of 2021.
The anticipated role that renewables and/or new technologies will play
In today’s challenging context marked by the continued prevalence of COVID-19 that has shaken Mauritius’ economy and in the wake of the surge in prices of petroleum products, it is anticipated that renewable energy will play a pivotal role in the country’s development.
Indeed, both solar and wind are important natural resources for Mauritius due to its location and climatic conditions which allow for all year-round intensive sunlight and adequate wind. It is anticipated that developing new technologies in these sectors will enable Mauritius to fully tap into the potential of its local renewable sources, thereby significantly maximizing their share in the energy mix.
The National Biomass Framework will encourage more landowners in Mauritius to engage in the production of renewable energy from biomass sources such as bagasse and consequently ensure a more equitable contribution from the sugarcane industry to support small farmers.
Furthermore, the incentives and subsidies on electric vehicles will encourage a “greening” of the transport system in Mauritius which currently accounts for a significant proportion of energy consumption. The use of ethanol which is being produced only for export should also be encouraged.
What are the key investment opportunities in the energy and natural resources sectors over the next five to ten years?
The setting up of additional solar plants and wind farms in Mauritius with increased capacities to supply the grid has the potential to attract both private sector and foreign investments in the production of PV cells and wind turbines, which could lead to local job creation. There is also the potential for developing hydro power plants in view of the development of new technologies such as cascading hydro power plants, a new way to utilize low level lying watercourses for harnessing energy.
A feasibility study on the potential to develop offshore wind farms could potentially represent an opportunity for Mauritius to develop its ocean economy into an important industry to sustain economic diversification, job creation and wealth generation.
In light of the significant importance highlighted in the 2021-22 budget on the development of renewable energy, there is also the possibility of the issuance of green bonds by the Bank of Mauritius (following a consultation paper issued in February 2021) to finance renewable energy projects.
With particular focus on sustainability, and on reducing carbon emissions, how will the energy and natural resources landscape change over the next five to ten years?
With the view to drive forward the sustainability agenda, the government has the goal of increasing renewable energy contribution to the total energy in Mauritius from 13% to 60% and phasing out the use of coal by 2030. Indeed, this is a highly ambitious but not entirely unrealistic goal.
In light of the investments proposed by the government in the 2021-22 budget on renewable energy and the fact that Mauritius has excellent natural resources such as sunshine, wind, biomass, hydro and wave potential, it is undeniable that in the next five to ten years the energy mix will shift more towards green and renewable energy. It is anticipated that solar, hydro and wind energy will become crucial vectors onto which the country’s economic and environmental sustainability will depend. However, the country’s energy profile is currently dominated by fossil fuels. In that regard and together with the challenges identified above, it is believed that the shift to achieving more than half of the share in the energy mix from renewable sources will be gradual over the next ten years and the country’s goal could be accomplished by the end of the ten years or even after.
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1 As per statistics for 2017, 21% of electricity was produced from local renewables.