Off-grid solar has come a long way reaching 420 million people worldwide, but significant investment is still needed to serve the remaining 840 million people that continue to lack access to power, according to a report.
The industry has become a US$1.75 billion annual market and continues to grow rapidly with revenues increasing by 30% each year since 2017, said the 2020 Off-Grid Solar Market Trends Report from the World Bank Group’s Lighting Global Program and the Global Off-Grid Lighting Association (GOGLA).
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More than 180 million off-grid solar systems have been sold globally to date and solar firms are spreading out into new geographies and underserved markets in response to greater saturation of the more established markets.
With growing consumer demand for appliances and back-up systems, solar firms are also trending towards supplying larger, higher-margin solar home systems. Pioneering business models are now also becoming mainstays such as companies using consumer PAYGo data to offer financing for non-energy products and services as well as next-generation off-grid utilities.
The Sustainable Development Goal (SDG7) for universal access to affordable, reliable, sustainable and modern energy by 2030 is still a long way off. The report noted that the sector would need to grow at an accelerated rate of 13%, with up to US$7.7 billion in external investment and up to US$3.4 billion of public funding necessary to bridge the affordability gap.
“We are eager to work with our local bank partners in the more mature off-grid markets where commercial debt can drive the next stage of market growth,” said Paulo de Bolle, senior director, Global Financial Institutions Group for the IFC.
Besides the 840 million people without power, there are also more than 1 billion connected to an unreliable grid and over 70 million farmers who could leverage off-grid solar for so-called PULSE [Productive Use Leveraging Solar Energy] solutions, such as solar water pumps, cold storage, and solar milling. In addition, products servicing public institutions are natural expansions of the traditional OGS market, which serves households and microenterprises. Both of these markets hold tremendous potential opportunities, said the report.
Looking forward, the sector is projected to serve 823 million users with off-grid solar products by 2030.