Biomass Energy Production
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
- Mauritius: Countrywide
- Mauritius: Pamplemousses
- Mauritius: Flacq
- Mauritius: Savanne
Sector Classification
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).
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.
Biofuels
Pipeline Opportunity
Biomass Energy Production
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
Market Size and Environment
< 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
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
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
> USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Market - Highly Regulated
Business - Supply Chain Constraints
Capital - CapEx Intensive
Impact Case
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
7.2.1 Renewable energy share in the total final energy consumption
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).
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).
13.2.2 Total greenhouse gas emissions per year
Energy sector and electricity generation emits 57.1% of the total GHG in Mauritius in 2019 (21).
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).
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
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).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Gender inequality and/or marginalization
Planet
Corporates
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
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
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
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
Mauritius: Countrywide
Mauritius: Pamplemousses
Mauritius: Flacq
Mauritius: Savanne
References
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