A new report out from the World Bank Group’s Lighting Global and Bloomberg New Energy Finance (BNEF) found that internationally the off-grid solar power market is growing and will become a $3.1 billion opportunity by 2020. That’s from essentially a non-existent market less than a decade ago. The report recognizes that there are still 1.2 billion people across the world without access to the power grid.
The report tracks the technology advances and some of the innovative business models that are making more solar power more accessible to people throughout the world. It’s intended for companies, investors, governments to show them the opportunities and challenges that the off-grid solar market faces.
The off-grid solar power market isn’t what most Americans would expect. It’s not a bunch of houses with solar panels and battery backups, rather it’s largely smaller devices—solar-powered lights, mobile phone charging stations and more. Still, it’s growing.
For instance, pay-as-you-go (PAYG) systems are making it possible for people to get a solar kit without having to make large up-front payments. Instead they make small installments. If the user doesn’t make a payment the system stops working. “These PAYG companies have attracted four times as much investment in half the time, compared with those selling products for cash,” the report said. “There are about 20 such companies that provide consumer financing active today, serving almost half a million customers, mainly in East Africa. Financiers are betting that barriers to entry for new PAYG suppliers will remain higher than in the cash sale segment and that customer relationships will run deeper. Both factors promise higher margins.”
Already more than 100 companies are focusing on devices for this market like stand-alone solar lanterns and solar home system kits. “By mid-2015 they had sold 20 million branded pico-solar products,” BNEF said. They define pico-solar as a solar panel array smaller than 10 watts and are mainly portable lights. In 2020 the report anticipated that 7 million off-grid households will use solar-powered fans and 15 million will use a solar-powered TV in 2020.
“In Kenya, more than 30 percent of people living off the grid have a solar product at home, according to our estimates. The pioneers have helped to create a vibrant market,” BNEF said.
Financing for the industry also is growing. It’s attracted more than $511 million in investments, a lot of it going to PAYG companies. “PAYG companies have attracted almost $160 million in 2015, including a record $45 million single debt round by Off-Grid Electric. PAYG companies are likely to continue attracting substantial amounts of both debt and equity in 2016,” the report said. Still, the report found that there are constraints in financing such projects.Tweet