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 EEMO. 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 financed through the Mitigation Action Facility – Detailed Preparation Phase will support the design of a guarantee fund to provide a first loss guarantees to banks for investments in energy efficiency projects through EPC implemented by ESCO. The activities will also provide capacity building for procurement of ESCO services by the private sector, and establish enabling financial and regulatory environments for ESCOs.