Energy Crisis: What Are Our Options?

Opinion

The energy crisis requires both supply and demand-side solutions, with dynamic pricing being a key demand-side strategy. Its success, however, hinges on public trust, regulatory coherence, and long-term planning

By Dr S.Z. Sayed Hassen

Mauritius is facing a growing energy crisis, with peak electricity demand nearly matching its generation capacity. To address this, the government has proposed the use of a powership, a floating power plant, as a temporary solution. Simultaneously, a shift in electricity pricing through dynamic pricing (DP) is under discussion. This article examines the viability of powerships, the economics of dynamic pricing, and their implications for consumers and national energy policy. It evaluates concerns about fairness, infrastructure, and sustainability, and proposes a pathway to ensure both short-term stability and long-term energy resilience.

 Mauritius, like many developing island nations, is confronting an increasingly urgent energy dilemma. With peak electricity demand surging and generation capacity nearing its threshold, the country faces a critical inflection point. The threat of energy shortages has real and immediate consequences, ranging from economic slowdown to reduced quality of life. This article investigates the multifaceted nature of the crisis and presents an overview of current and proposed solutions, with a focus on the proposed deployment of powerships and the strategic shift to dynamic pricing as tools to achieve energy stability.

Current Energy Landscape in Mauritius

As of July 2025, Mauritius’s installed generation capacity stands at approximately 625 MW, barely exceeding the peak demand which has risen to 600 MW. Historically, power generation expansion planning has lagged behind actual consumption trends. Peaking plants, designed to operate only during short, high-demand windows, are now running continuously—indicative of systemic stress. With the economy growing and electrification increasing, this margin is expected to vanish completely in the near term. The strain is further compounded by the limited land area available for new large-scale plants, making traditional solutions increasingly infeasible.

The Powership Proposal

In response to this immediate challenge, the government has proposed a powership to provide up to 100 MW of emergency power. Powerships, or floating power plants, are maritime vessels retrofitted with generators capable of burning diesel, gas, or even hosting nuclear micro-reactors. Their primary appeal lies in rapid deployment, mobility, and flexibility in fuel use. For Mauritius, where land scarcity constrains conventional infrastructure expansion, this approach offers short-term relief. However, risks include marine environmental degradation, navigational hazards, high operational costs, and complex integration with the national grid infrastructure. Effective regulation and environmental oversight will be critical if this route is taken.

Understanding Dynamic Pricing

Parallel to the powership proposal, the government is exploring dynamic pricing (DP) as a long-term demand-side management tool. DP aligns electricity prices with supply-demand dynamics, encouraging consumers to shift usage to off-peak hours. The ultimate form of DP is real-time pricing (RTP), where prices vary hourly. A more transitional model is critical peak pricing (CPP), where rates spike only during predefined high-demand periods. Advocates argue DP reduces peak loads by up to 15%, minimizing the need for new generation capacity. Moreover, it creates a more equitable distribution of electricity costs aligned with actual system stress and availability.

Consumer Impact and Public Perception

One of the primary criticisms of DP is perceived unfairness. For decades, consumers have paid fixed rates, regardless of when they use electricity. Transitioning to time-sensitive pricing could disadvantage low-income households or those with inflexible consumption patterns. Policymakers must prioritize transparency and public education, akin to the mobile phone industry’s rollout of time-dependent tariffs. Simulations suggest that most consumers would see minimal changes in monthly bills, while heavy peak users may experience cost increases. Visual tools showing bill projections and usage profiles will be essential to building consumer trust.

Economic and Policy Perspectives

The concept of variable pricing in utilities is not new. Nobel Laureate William Vickrey argued that dynamic pricing reflects economic reality more truthfully than fixed pricing, which masks true resource scarcity. From an economic standpoint, electricity is a unique commodity—it must be consumed when generated, and storage is expensive. Pricing that ignores temporal demand variation, leads to inefficiencies and overcapacity. Policymakers must reconcile economic theory with political and social feasibility, balancing equity and efficiency through subsidies, tiered pricing, or opt-in pilot programs.

The Role of Tariffs and Education

Tariffs are the linchpin of any sustainable energy strategy. Poorly designed tariffs can stifle investment, while well-crafted ones can stimulate innovation and efficiency. DP tariffs should be tiered, with safeguards for essential usage, and structured in a way that makes peak shifting attractive but not punitive. Education campaigns are critical. Without understanding the rationale behind DP, consumers may resist or reject it. Campaigns should use clear, relatable messaging, data visualizations of potential savings, and case studies from countries with successful DP implementation.

Recommendations

This article proposes a hybrid approach. In the short term, the powership can act as a stop-gap, but it must be coupled with grid modernisation and environmental safeguards. Medium to long term, the focus must shift to renewable integration, storage solutions, and efficient pricing. Specific recommendations include:

1. Deploy the powership only as a temporary, tightly scoped measure, limiting its operation to critical gaps in supply
2. Accelerate the adoption of renewable energy and grid modernization. Invest in solar PV, wind farms, and microgrids. Simultaneously, upgrade the national grid to accommodate decentralized generation and implement smart grid technologies for better demand management.
3. Design and test dynamic pricing models through pilot programs. Select neighbourhoods or consumer segments to trial TOU (or CPP) schemes, collecting detailed feedback and performance data. Use findings to refine the model before nationwide rollout.
4. Implement smart metering infrastructure. Without smart meters, DP is impractical. Government should support CEB in deploying smart meters with funding, technical support, and regulatory oversight.
5. Build institutional and regulatory capacity. The Energy Ministry, CEB, and relevant regulatory agencies (Utility Regulatory Authority) should be equipped with skilled people and systems to manage DP, monitor market behaviour, and intervene where necessary to protect consumers.
6. Develop comprehensive public communication strategies through visually engaging education materials focusing on how consumers can take control of their bills.
7. Establish a social protection mechanism. Introduce subsidies, rebates, or baseline pricing to protect low-income households from price shocks.
8. Encourage innovation and entrepreneurship through start-ups and established firms to offer energy management tools, battery storage, and consultative services.

Conclusion

Mauritius stands at a crossroads. The energy crisis cannot be solved by supply-side fixes alone. Demand-side strategies, especially dynamic pricing, offer powerful levers for change. But success depends on public trust, regulatory coherence, and long-term planning. A balanced mix of infrastructure investment, pricing reform, and education can help the country transition from crisis management to energy resilience, ensuring sustainable power for all.

Dr S.Z. Sayed Hassen serves as an Associate Professor within the Department of Electrical & Electronic Engineering at the University of Mauritius’s Faculty of Engineering.

Mauritius Times ePaper Friday 18 July 2025