The Cost of Power: How Mauritius is Rewriting the Rules on Energy Savings

As a remote island nation, Mauritius faces a dual energy crisis: it is highly vulnerable to the impacts of climate change, yet it remains heavily reliant on expensive, imported fossil fuels to keep its economy running. With the government setting an ambitious target to generate 60% of the country’s electricity from renewable sources by 2030, the national focus has heavily shifted toward green generation. However, the cleanest and cheapest megawatt is always the one you never have to produce in the first place.
While transitioning to solar and wind takes time, optimising the energy we already use offers an immediate lifeline. For the local business sector, slashing energy waste is no longer just an environmental ideal—it is an economic necessity to stay competitive against rising global supply costs.
Since 2017, Mauritius's largest energy users have been required by law to carry out regular energy audits. While these assessments consistently identify practical ways to cut energy use and operating costs, many of the recommendations never leave the paper they are written on. Historically, businesses have run into the same familiar walls: high upfront capital costs and uncertainty about the actual return on investment.

Turning energy audits into action

The Economic and Financial Measures (Miscellaneous Provisions) Act 2026 aims to permanently dismantle these barriers. By amending the Energy Efficiency Act, the new legislation establishes a formal legal framework for Energy Performance Contracting (EPC). This model introduces specialised third-party firms—known as Energy Service Companies (ESCOs)—that deliver turn-key energy-saving projects and are paid directly from the savings they produce.

How the ESCO Model Works

An ESCO designs, installs, and manages energy-saving improvements, such as modernising commercial cooling systems, upgrading industrial equipment, or installing smart lighting. Crucially, the ESCO often helps secure or provide the financing. Because their payment depends entirely on the savings actually achieved, the ESCO shares the financial risk if a project underperforms.
To ensure fairness, all savings are independently measured and verified using rigorous international standards. This structure allows commercial clients to completely upgrade their facilities with little to no upfront capital investment.

The 2026 law accommodates two primary financial approaches:

• The Shared Savings Model: The ESCO funds the project entirely and takes a predetermined percentage of the resulting energy savings.
• The Guaranteed Savings Model: The client funds the upgrades, and the ESCO contractually guarantees a specific level of energy savings, covering the deficit if targets are missed.
  
  

What is New Under the 2026 Framework?

The updated framework gives the energy efficiency push teeth, transforming it from a passive reporting exercise into an active compliance market:

• Audits can now lead directly to action. The Energy Efficiency Management Office (EEMO) can require that audit recommendations be carried out through an ESCO contract.
• A regulated market. ESCOs must be registered with EEMO, which will oversee the sector, keep a public register and promote its growth. Rules on qualifications and grading of ESCOs are being finalised.
• Tougher penalties. Maximum fines for breaches rise significantly, reaching Rs 1 million in the most serious cases.
  
  

Building and Financing the Market

To ensure the success of this new ecosystem, further institutional support is already on the way. A new credit-guarantee scheme backed by international climate partners is being developed specifically to lower risk and encourage local commercial banks to lend to ESCO projects. Concurrently, technical professionals across Mauritius are undergoing specialised training to build a robust local network of certified measurement and verification experts.

Who Stands to Gain?

The primary beneficiaries of this shift will be Mauritius’s high-demand energy consumers—including hotels, shopping malls, manufacturing factories, and large public institutions. For these entities, steady energy demands mean massive potential for optimisation.

At the same time, for banks, financial institutions, and green investors, a highly regulated market with independently verified returns offers an attractive, low-risk class of sustainable investment opportunities.

If the supporting regulations and financing structures follow through smoothly, this landmark reform could make energy efficiency a core pillar of how Mauritius achieves its climate targets. Ultimately, it promises to shift energy management away from a mandatory compliance cost and into a self-funding investment.

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Author's note: Our team worked closely with policymakers and stakeholders as these reforms were developed. As the framework takes shape, including the upcoming ESCO registration regulations and market-development initiatives, businesses and investors should keep a close eye on the opportunities it creates.