Author: Marco Dorothal, Solarplaza
The report compiled performance data from 65 different companies, collected between January and June 2017. The report findings showed that, since 2010, off-grid solar installations have resulted in an overall reduction of $5 billion in energy costs globally. Other key findings included a 188% increase in available hours of light per household, as well as a total of 120.3 million of people with improved energy access. These facts show that the off-grid market is still thriving, even though there was a 7% drop in worldwide sales of off-grid solar products between July and December 2016. The sector really needs to maintain its progress if it aims to meet universal energy access targets of powering an additional 195 million people by 2030.
In order for the sector to keep on expanding, it will need to overcome some remaining hurdles. One of those hurdles has been the demonetization happening in India since November 2016. This has negatively affected sales in the Indian economy, which is primarily reliant on cash transactions, and has led microfinance institutions to reduce resources available for new customers and refocus their efforts on the collection of payments from existing customers.
Another key hurdle to take into account is the fact that East Africa continues to experience a massive drought. Some areas, like Tanzania, have shown great improvement recently. However, some rural customer segments, particularly countries in the Horn of Africa, are still impacted by the drought in a way that negatively affects their purchasing power and overall livelihoods.
Entry-level products are also causing some trouble, since they have been subject to commodification by copycats and counterfeiters, causing competition to increase and become more intensified over the past years.
Despite these hurdles, the sector has gained increased interest from governments and development finance institutions that have resulted in growth for different regions. Countries, such as Burkina Faso and Mali, have experienced significant growth, mainly because of donor activity and results-based financing. Forecasts show that the market is expected to keep on growing as more and more governments form partnerships with investors and new financing methods are established and implemented in this sector.
This report shows that businesses operating in the off-grid electricity sector have to take the difficulties and unpredictabilities that are present in the market into consideration. According to the Executive Director of GOGLA, Koen Peters, the organization to stimulate the development of the off-grid sector by putting an emphasis on working with investors, governments and other stakeholders. He believes that the sector can reach the 2030 universal energy access target with the help of proper partnerships and by creating a fruitful environment that will allow for supportive policies to be constructed and integrated into the market.