Bright landscape of sugarcane fields near the mountains on Mauritius Island

Biomass Energy Production

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Biomass Energy Production

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< USD 50 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Climate Action (SDG 13) Zero Hunger (SDG 2)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9) Responsible Consumption and Production (SDG 12)

Business Model Description

Set up biomass-based power plants, increase the production capacity of the current biomass energy plants, and contribute to the phasing-out of coal by diversifying organic sources for biomass beyond bagasse, such as arundo donax and eucalyptus. In addition to tested alternatives such as sugarcane trash and high calorific sugar, use abandoned lands for cultivating alternative crops of biomass listed under the National Biomass Framework.

Expected Impact

Foster the circular economy and industrial symbiosis by utilizing agricultural waste for biomass energy, replace fossil fuels, lower carbon emissions and secure a long-term renewable energy supply.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Mauritius: Countrywide
  • Mauritius: Pamplemousses
  • Mauritius: Flacq
  • Mauritius: Savanne
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Mauritius is heavily dependent on fossil fuels. In 2020, 76.1% of energy was generated mainly from fuel oil and coal. Only 23.9% of energy was generated from renewable resources. The government of Mauritius spent around MUR 24,090 million (USD 635.5 million) for fossil fuels import, which stands for 14.5% of Mauritius's total import value in 2020 (1).

Policy priority
The Long-Term Energy Strategy for 2009-2025 plans to increase the use of renewable energy sources for electricity generation to 60% by 2030 and reaching 35% self-sufficiency through renewables by 2025 (3, 4). Coal phase-out by 2030, diversification of energy base and GHG reduction are also among the government’s Nationally Determined Contributions (5).

Gender inequalities and marginalization issues
Although 83.3% of legal frameworks promote and enforce gender equality in Mauritius, only 5% of the workforce of the energy sector is women (6, 7). Tackling gender pay gaps in the energy sector and devising policies for women’s equitable access to renewable energy sources for their homes and businesses must be addressed (8).

Investment opportunities introduction
Local energy demand amounts to MUR 20 billion (USD 450 million), supplied mostly through imported fossil fuel. The Central Electricity Board (CEB) plans to invest MUR 5.3 billion (USD 128 million) in the next three years to multiple renewable energy projects and in battery storage system for stabilization (9).

Key bottlenecks introduction
Return from renewable energy projects is highly dependent on offtake agreement and pricing by Central Electricity Board (CEB). The country needs to ensure a stable network through smart grid development to address intermittence issue. Allocation of Mauritius’s scarce land for renewable energy development might become incompatible with other land use options (21).

Sub Sector

Alternative Energy

Development need
In 2020, electricity generation accounted for 43% of the total GHG emissions in Mauritius. Mauritius' reliance on imported fossil fuels heightens the need for extensive renewable energy generation. Investments in solar, biomass and wind require private funding for the country’s transition to a green economy as well as electric vehicle and electric bus integration (2, 3, 21).

Policy priority
Mauritius targets to reach 35% self-sufficiency regarding electricity transfer and 10% efficiency in the electricity sector by 2025 in its Long Term Energy Strategy (4). In the 2021-22 budget speech, the government announced their objective of at least a 5% reduction in electricity consumption of all public institutions, and commissioned the set up of six more solar PV farms (9).

Gender inequalities and marginalization issues
External shocks that threaten energy security vulnerate marginalized segments of society more than any others. The affordability of energy is essential for reducing social inequalities in the community. Women's workforce cannot be discarded in the energy sector to accomplish the government's renewable energy production goals.

Investment opportunities introduction
Scalability and profitability incentivize solar PV investments in the short to medium term. Developing additional sources of biomass offers a viable business in the longer term and indispensable for government’s long term energy strategy. The national biomass framework allows sugar planters to benefit from USD 0.08 per kWh of electricity (9, 39).

Key bottlenecks introduction
Land scarcity, lack of national land use policy, the current regulatory framework and structure of electricity tariff, and a lack of smart grid to address intermittence issue are the key bottlenecks of the alternative energy subsector in Mauritius.

Industry

Biofuels

Pipeline Opportunity

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Investment Opportunity Area

Biomass Energy Production

Business Model

Set up biomass-based power plants, increase the production capacity of the current biomass energy plants, and contribute to the phasing-out of coal by diversifying organic sources for biomass beyond bagasse, such as arundo donax and eucalyptus. In addition to tested alternatives such as sugarcane trash and high calorific sugar, use abandoned lands for cultivating alternative crops of biomass listed under the National Biomass Framework.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

< USD 50 million

The government's Long Term Energy Strategy (2009-2025) targets increasing bagasse-based electricity to 600 GWh annually in the medium-term, which will increase the market size to approximately USD 50 million under the current pricing scheme of USD 0.08 per kWh (4).

The Central Electricity Board (CEB) Annual Report 2018-2019 states that they spent MUR 939 million (USD 27 million) in June 2019 for the purchase of electricity generated from bagasse (15).

The Budget Speech 2022/23 acknowledges that energy consumption in 2030 will require 1,196 MW installed capacity whereas current capacity stands at 761 MW, of which 165 MW comes from renewable resources. Government trajectory is to generate additional 435 MW from renewable resources by 2030 (48).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

According to consultation with a prominent biomass energy producer in Mauritius, conducted in November 2021, investments in biomass energy production are expected to generate an IRR of up to 15% as Africa is a competitive market and government launches new tenders (16).

Net profit of power production for Terra Group, one of the prominent players in the market, was MUR 35.8 million (USD 873,000) in 2020 and MUR 160.4 million (USD 4.6 million) in 2019 (17).

Alteo Energy Ltd operates a 41 MW biomass / coal power plant at Union Flacq, Mauritius and recorded an EBITDA margin of 18% in 2021. The company is planning to develop its facility into a 100% biomass energy plant (30).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Long Term (10+ years)

An academic study of an energy cogeneration project from biomass reveals a payback period of ten years for a thermal plant of 30 MW of installed capacity (47).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Market - High Level of Competition

The biomass energy sector in Mauritius has a high cost of new entry. The sector is already dominated by big international actors that operate their own sugar mills and refineries. A considerable amount of bagasse production is used by these actors.

Market - Highly Regulated

The sugarcane industry is highly regulated in terms of pricing and output. The export structure is centralized by Mauritius Sugar Syndicate.

Business - Supply Chain Constraints

Bagasse supply is limited with crop seasons of bagasse; biomass power plants need to hence search for alternative resources for the rest of the year (19).

Capital - CapEx Intensive

Biomass energy production is a capital-intensive investment with construction of a biomass-based power plant costs ranging from USD 50 to 80 million (11,18). The ageing workforce of sugar planters, increased labor cost in Mauritius, use of capital- and labor-intensive woodchips as the alternative of coal also increase the cost of operation.

Impact Case

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Sustainable Development Need

Mauritius is dependent on imported fossil fuels, which contribute 14.5% to total import value (1). The Mauritian government aims to increase renewable energy production and reduce greenhouse emissions, including through biomass energy sources.

Phasing coal out in energy production by 2030 requires developing alternative sources of renewable biomass as producers use coal during the off-season of bagasse.

Mauritius, as a Small Island Developing State (SIDS), is extremely vulnerable to the effects of climate change as well as external economic and energy shocks (37).

Gender & Marginalisation

Women are underrepresented in Mauritian energy sector, comprising merely 5% of the industry's workforce (7).

Disruption in energy supply related to renewable energy intermittence or higher pricing exacerbate the existing vulnerabilities of the poorer segments of the society in terms of social inclusion (33, 34).

Expected Development Outcome

Investing in biomass energy production will help decrease Mauritius’s dependency on imported fossil fuels, and help government achieve its target of 35% self-sufficiency regarding electricity production (4).

Biomass energy production will facilitate Mauritius' transition to clean and sustainable energy, helping country achieve the target rate of 60% in use of renewable resources in total electricity generation, and 30% in reduction of greenhouse gas emissions (3, 20).

Energy security of the country will increase and vulnerability to the external shock will decrease with less dependency on fossil fuel imports (35).

Gender & Marginalisation

Setting up a new biomass power plant will create employment opportunities for women in the renewable energy sector. Investments in biomass energy will also increase women's access to renewable resources for their homes and businesses.

Green energy resources offer cost-effective and sustainable solutions to vulnerable communities and women to prepare, survive and adapt to the impacts of climate changes (35).

Youth plays critical roles in the transition from traditional sources of energy to green energy with their advocacy works that they are capable of building partnerships between local communities and the government, and they are innovative in their green energy solutions (36).

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.2.1 Renewable energy share in the total final energy consumption

Current Value

Electricity generation from renewable resources is only 23.9% in Mauritius. In 2020, bagasse contributed 13.3% of the total renewable energy production of the country, which account for around 82.8% of renewables (1).

Target Value

The government targets to increase its electricity generation from renewable resources to 60% by 2030 (1). Bagasse will be the dominant contributor to the renewable energy mix with 14.1% in 2030 (22). An upcoming National Bagasse Framework was announced (9).

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

Energy sector and electricity generation emits 57.1% of the total GHG in Mauritius in 2019 (21).

Target Value

Although Mauritius only emits 0.01% of world's CO2 emissions, the government aims to reduce the greenhouse gas emission of the country by 30% in 2030 (23, 20).

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

Current Value

Proxy indicator (percentage of agricultural output by number of producers): 35% of the total sugarcane production comes from about 30,000 smallholder farmers. Bagasse is generated in volumes ranging from 1.6 to 1.8 million tons per year for use in renewable energy generation (46).

Target Value

N/A

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

Directly impacted stakeholders

People

Electricity consumers will enjoy cleaner, sustainable, and efficient electricity supply.

Gender inequality and/or marginalization

Employment opportunities will be created for women in the renewable energy sector. It will increase women's access to renewable energy resources for their homes and businesses.

Planet

Biomass energy production will contribute to the reduction of carbon emissions in Mauritius.

Corporates

Biomass energy producers, sugar sector and industry using biomass generated electricity will expedite their green energy transition.

Public sector

The public sector will spend less on the import of fossil fuels. The Ministry of Energy will have greater leeway on sustaining the country's energy demand with renewable resources.

Indirectly impacted stakeholders

Gender inequality and/or marginalization

Women with educational background in technical or engineering fields will access additional job opportunities.

Planet

Biomass energy production will lessen air pollution due to the decrease in coal burning.

Corporates

Companies which have high levels of energy consumption and energy expenditure will benefit from stable and cost effective green energy resources.

Outcome Risks

Bagasse-based biomass power plants cause fugitive emissions of particulate matter (24). The use of woodchips and granules as the alternative to coal in biomass power plants causes deforestation (25).

There is a high risk of fires and explosions associated with thermal biomass power plants, especially with woodchip burning plants (26).

As large-scale agricultural lands are mostly controlled and owned by the male population, renewable energy investments that necessitate a vast land area may exclude women (36).

An increase in biomass power plants might increase the country's dependency on coal import, if alternative inputs are not available, and the government may not achieve its goal of phasing out coal by 2030.

Use of crop-based biomass alternatives may result in a dilemma between fuel and food, raising the price of food products as more farmland is diverted to energy production.

Impact Risks

Mauritius' land diversification policies to lessen dependency on imported agricultural products may result in competition over bagasse, which could hinder the expected impact scale of biomass plants.

Biomass production relies on agricultural inputs and is hence exposed to external risks associated with agricultural production, such as climate and market conditions.

Impact Classification

C—Contribute to Solutions

What

Biomass energy production will decrease the country's dependency on fossil fuel import and reduce greenhouse gas emissions.

Who

The farming population benefits from income generation from agricultural waste, and companies, households and the planet enjoy access to domestic green energy alternatives.

Risk

Climate and market conditions, and domestic land diversification policies may hinder the ability to generate impact at scale by limiting the availability of agricultural biomass raw material.

Contribution

Besides biomass energy production from bagasse, wood and waste have a potential for green energy production in Mauritius.

How Much

The Government of Mauritius aims to generate 60% of their electricity from renewables by 2030, with biomass energy share in the electricity mix at 17% and waste to energy at 4% (1, 4).

Impact Thesis

Foster the circular economy and industrial symbiosis by utilizing agricultural waste for biomass energy, replace fossil fuels, lower carbon emissions and secure a long-term renewable energy supply.

Enabling Environment

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Policy Environment

The Renewable Energy Roadmap 2030, 2019: Released by the Government of Mauritius to increase energy generation from renewable resources, and to devise energy sector strategy for a greener and cleaner sector (20).

Long-Term Energy Strategy for 2009-2025, 2008: Contains Mauritius' action plan with timelines to diversify the country's energy supply (4).

Renewable Energy Strategic Plan (RESP) 2018-2023, 2018: Released by the Mauritius Renewable Energy Agency (MARENA), it states eight different strategic goals of the agency to enhance the renewable energy sector (40).

The Government Programme 2020-2024, 2020: Includes the Mauritian government's targets to carry the country forward towards a more sustainable and green society (41).

National Biomass Framework: Announced in the 2021-2022 Budget Speech, it ensures a remuneration of bagasse at MUR 3.50 (USD 0.08) per kWh and of MUR 3,300 (USD 76.50) per ton of sugar for bagasse, for all planters and producers (9).

Financial Environment

Financial incentives: In the 2021-2022 budget, the government outlined setting up a National Biomass Framework, remunerating bagasse at MUR 3.50 (USD 0.08) per kWh and MUR 3,300 (USD 75) per ton of sugar for bagasse for all planters and producers (9).

Fiscal incentives: Provision of 50% straight line accelerated income tax depreciation for green technology expenses of green investments, land conversion tax exemption for utility renewable energy project, tax exemption for the Mauritius Revenue Authority approved projects (32).

Regulatory Environment

Renewable Energy Agency Act, 2015: Establishes the Mauritius Renewable Energy Agency (MARENA) (42).

Energy Efficiency Act, 2011: Establishes the Energy Efficiency Management Office, which promotes national energy efficiency awareness and carbon emissions reduction. The office also examines the necessary legislations for energy efficiency and the conditions for undertaking energy audits (43).

Sugar Industry Efficiency Act, 2001: Establishes the Sugarcane Sustainability Fund to promote sugarcane and bagasse production. The act requires the Mauritius Cane Industry Authority to develop a Renewable Sugar Cane Industry Based Biomass Framework to foster energy generation from biomass (45).

Utility Regulatory Authority Act, 2004: Establishes an independent body of Utility Regulatory Authority (URA) to regulate the utility services (44).

Marketplace Participants

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Private Sector

Terragen Ltd., Alteo Energy Ltd., OmnicaneThermal Energy Operations Ltd., Medine Group.

Government

Ministry of Energy and Public Utilities (MEPU), Central Electricity Board (CEB), Mauritius Renewable Energy Agency (MARENA), Energy Efficiency Management Office (EEMO), Utility Regulatory Authority (URA), Ministry of Environment and Sustainable Development.

Multilaterals

Development Bank of Southern Africa (DBSA), Southern Africa Development Community (SADC), World Bank Group, United Nations Development Programme (UNDP), UN Environment, Green Climate Fund, ADFD Funds, International Renewable Energy Agency, Renewable Energy and Efficiency Partnership (REEEP), Global Environment Facility (GEF).

Non-Profit

Agence Française de Développement (AFD).

Target Locations

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country static map
semi-urban

Mauritius: Countrywide

Biomass energy production may spread across all regions in Mauritius where 90% of arable land is used for sugar cane cultivation and biomass is the main contributor to renewable energy supply mix in the country (22).
semi-urban

Mauritius: Pamplemousses

To offset carbon gas emissions generated by the transportation of bagasse, power planters find biomass sources that are as close as possible to them (27).
semi-urban

Mauritius: Flacq

Sugar mills and refineries are located around Flacq district (28).
rural

Mauritius: Savanne

La Baraque cogeneration power plant and sugar mill are located at the same place in the district of Savanne (29).

References

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