Mitigation Action Facility – Detailed Preparation Phase

Mauritius has communicated an ambitious economy wide energy efficiency target of 10% by 2030, and needs to develop concrete implementation instruments for its achievement. Under the Energy Efficiency (Energy Consumer & Energy Audit) Regulations 2017, large energy consumers in the public and private sectors must commission a mandatory energy audit when notified by the Energy Efficiency Management Office in Mauritius. The government has also introduced a grant programme for the manufacturing sector offering 75% financing of audit costs. In principle, implementation of audit recommendations is mandatory. Although, public institutions’ annual budgets do not cater for investments in energy efficiency, and private enterprises focus their limited capital in investments in their core business. Furthermore, no financial mechanism exists to support implementation and hindering the Government’s enforcement means.

The implementation of energy efficiency measures by energy service companies (ESCO) through Energy Performance Contracting (EPC), where the investments is repaid through the achieved energy savings provides a solution to public and private entities barriers for investment. Although, while there are existing cases for the use of EPC by ESCOs in Mauritius, there is a lack of technical capacity in local banks to assess viability and risk of such projects, considering them ‘high-risk’ by default. ESCOs’ collateralization of such loans towards banks is also problematic as the assets they purchase are installed at their clients’ premises. This prevents access to capital by ESCOs to invest in energy efficiency on clients’ behalf.

The project funded by the Mitigation Action Facility – Detailed Preparation Phase will support the design of a revolving first loss guarantee fund, providing guarantees to banks for investments in energy efficiency projects through EPC implemented by ESCOs. The activities will also provide capacity building to banks for financing energy efficiency projects, measurement and verification certification to ESCO professionals, and procurement of ESCO services to the public sector. The Detailed Preparation Phase will support the establishment of enabling financial and regulatory environments for ESCOs, through the assessment and revision of existing public procurement and energy related regulation, the establishment of an ESCO accreditation registry, and the development of frameworks and tools to facilitate EPC in Mauritius.

This project is supported by the Mitigation Action Facility on behalf of the German Federal Ministry for Economic Affairs and Climate Action (BMWK), the UK Department for Energy Security and Net Zero, the Danish Ministry of Climate, Energy and Utilities (KEFM), the European Union and the Children’s Investment Fund Foundation (CIFF).