Mauritius: Renewable Energy in Favour of Fossil Fuels – A Glimpse of Current Development
Why Renewable Energy Development?
The island state of Mauritius is gradually shedding its long-held dependence on fossil fuel for electricity generation by expanding development in wind, photovoltaic (PV) solar, ocean energy and biomass waste technologies. A significant part of the decision to reduce appetite for petroleum products (as part of the energy security policymaking) is explained by the volatile nature of oil prices in Mauritius, as well as the competing demand from emerging economies. In fact, since the OPEC-engendered oil crisis of the 1970s, the country has been bracing for yet another spike in oil prices. The economy has been able to manage the risks by diversifying and strengthening export activities in the decades leading up to current times. By focussing attention on local renewable energy development, government expresses the aim to achieve multiple returns — namely on the climate change front, renewable energy targets, green jobs and energy independence — but will offer a stronger line of defence should the price of oil experience jump. This is not unlikely as OPEC has already made supply cuts at the end of 2018 and early indication suggests late 2019 may be the theater for a deeper cut. Backed by its international commitment to reduce greenhouse gases laid out in the Nationally Determined Contributions (NDCs), responsible authorities have aligned regulatory controls to foster renewable energy development that aims to achieve 35% of the total energy mix by 2035. A separate Utility Regulatory Authority came together in 2018 to oversee independent energy producers — which generate approximately 60% of the total electricity, with 40% generated by the public electricity board.
The Mauritius government has recently managed to secure prime funding for a large-scale PV project aimed at equipping low-income households with 10 MW of solar power. It aims to divide the energy into 10,000 systems over the next few years. The Abu Dhabi Fund for Development Project Facility and the International Renewable Energy Agency have agreed to make the concessionary loan for the Mauritian project. This boost will enable the dual goal of flexible provision of electricity and progress towards national renewable energy targets, while satisfying internationally-agreed goals in environmental agreements (e.g., NDCs). Businesses have also benefitted from recent creation of 2,000 PV plants producing 4 MW of energy. Thus, with these initiatives ready to take off and more in the pipeline can Mauritius stay on track to achieve the said goals by 2035? One piece of information is known for sure, solid progress is due for 2020.
Strong campaigning for renewables as well as promising research and development in hydroelectricity and liquefied natural gas (LNG) have produced encouraging results as of late 2018. Recent government estimates sees a realistic 28 percent of the total energy mix to renewable energy by 2020, whereas in 2017 the actual proportion amounted to 22 percent. Moreover, the government aims to achieve 11 percent of solar energy out all of all renewable energies by 2020. This is welcome news as the country lags behind in PV projects relative to the abundance of solar irradiation it receives annually. Considering the estimated African energy mix for renewable energies hovering at 1 percent, Mauritius can serve as a role model but most importantly as partner for aspiring nations in the renewable energy policy arena.
Sugar Cane “Bagasse”: Here to Stay
The leftovers of sugarcane extraction, the bagasse, make up an important share of electricity generation; processed sugarcane byproducts account for 14 percent of the electricity. In essence, the biomass goes through a combustion process in thermal power plants at the start of harvest season to generate energy. The extraction of the carbon dioxide occuring during sugar cane processing and energy production is kept for use in carbonated drinks. As the nation receives 60 percent of its electricity from the independent private operators, their thermal power stations compensate with coal-generated electricity when sugar cane is scarce. That is a condition decision-makers have been seeking to reduce through alternate renewable energies. Responsible authorities have offered their support in technology optimization and efficiency support schemes, namely greater utilization of the cane byproducts. It is understood that the same operators will continue to represent the largest renewable energy providers, at least for the medium term, based on the policy agenda. Thus the industry is unmistakably a leading force in the renewable energy business. Interestingly, a case study of bagasse use in Mauritius shows that not only massive savings had been realized over 45 years, by displacing heavy oil for sugar cane in electricity production, but 4.5 million tons of carbon dioxide emissions were avoided. If the business case is for sugar cane production is no longer a profitable one, the science for electricity production aligns strongly with climate change objectives.
African Investment Opportunities
The financial climate for renewable energy investment appears to be strong in Mauritius. Commercial banking continues to receive the backing of international financing institutions, with the Agence Française de Developpement being at the fore recently. The SUNREF project builds partnerships between the French agency and local partner banks by creating so called “green credit lines” that can be extended to various project developers in renewable energy solutions on a long term basis. Moreover, financial risk is carefully assessed based on the type of investment, borrower type as well as the length of the financing required (taking into account the maturity of renewable investment market). This form of partnership boasts the advantage of sharing expertise in establishing project financing objectives as well as creating guidelines on energy optimization and efficiency for use by the end-user companies. Statistically speaking, private entities issue about 90% (in 2016) of the funds needed to power renewable projects, on a global scale. Despite favourable incoming sources of public funding from Italy (€2M & $28M from the Green Climate Fund), commercial enterprises will thus dictate how well the market succeeds or fails in Mauritius.
Mauritius is poised to become an epicentre of international commercial activity with respect to renewables development. With the financial services benefiting from continued international support and interest from fund entities, it is unsurprising to note that about 40% of private equity funds from Africa as a whole had Mauritius as their base of operation in 2014. In the context of energy markets, the picture is favourable. Data shows total energy access in rural as much as in urban areas. Relying on the 2025 renewable energy policy, along with very little red tape for making business, renders the business landscape more competitive but opens the door to foreign renewables technology. For example, Deep Ocean Water Application (DOWA), is a type of deep sea energy extraction process by which the government will apply to meet air conditioning needs while drastically reducing its wattage needs. A DOWA project will pump cold sea water via a deep ocean current for use in Port Louis plants traditionally consuming 23 MW using only 1.5 MW to cool the same plants. A US company partnered with the local developer to assess the feasibility of the proposed project, with the operational date set for mid 2020. Unlike traditional forms of renewable energy, intermittency is not a limiting factor as currents are far more predictable than solar and wind patterns. Once implemented, the system will help the users achieve energy savings while avoiding 51,000 tons of CO2 emissions annually.
While high level planning is going in the right direction, pushing forward in this relatively new endeavour requires deeper institutionalization of energy management, more so than in the past because of the inclusiveness that renewable energy promotes in Mauritius. While considerable efforts have been noted by the private sector as much as the public ministries in the past few years — to grow the renewable sector and assure constant supply of electricity — political will has to be strong towards small and medium enterprises and cooperatives to support their aspirations to support themselves on renewable energy. Surely, the Central Electricity Board has developed schemes for small scale producers to generate their own clean energy but for the well-known collective of small sugar cane producers seeking to organize an energy cooperative has struggled to gain the same right. Whereas they used to produce commercial sugar cane for decades, the commodity has become economically unviable. However, they stand to gain significantly from utilizing their land to house large PV panels for their own needs and to resell any excess output. The democratization of renewable energy is needed to assure not only large producers benefit from the renewable energy policy. In any case, expanding the criteria for energy production to include as many types of producers can only benefit the country and its people in the long run.