Sunday Nov 27, 2022

Africa’s off-grid solar sector seeks to rebuild after pandemic shock – African Business

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Africa’s off-grid solar power industry is growing but is in urgent need of further support, as the sector struggles to shake off the negative impact of the Covid pandemic on providers of equipment and services, and the ability of customers to pay.

Bringing solar power to communities both remote and in more populous areas that suffer from inadequate grid provision is regarded as vital if the UN sustainable development goal of bringing universal electricity access to all by 2030 is to be realised.

It also promises to replace polluting kerosene with cleaner – and cheaper – solar powered devices for lighting, so helping to meet climate goals as well as achieving social and economic benefits.

Falling costs for solar products and an increase in the number of suppliers in sub-Saharan Africa has seen the sector take off over the last 10-15 years.

By the end of 2020, the global off-grid sector had developed into a $1.75bn annual market, serving 420m users, mainly in sub-Saharan Africa, according to the World Bank’s Lighting Global Programme. That was reflected in 30% annual revenue increases for off-grid solar firms in 2017-19.

But the pandemic put an end to those sort of growth rates in many parts of Africa, even if the market is still expanding faster in some countries than others.

Overall growth in sales volumes for appliances and services powered by built-in or household solar panels – such as solar lanterns, multi-light systems, batteries for phone charging and solar home systems – have faltered.

Spending cuts due to the strain on incomes, movement restrictions for suppliers and supply chain problems caused by the pandemic are holding it back. Further disruption to global trade due to the impact of the war in Ukraine has only added to these problems.

Mixed regional picture

In East Africa, a hotspot for home solar products, sales of off-grid lighting products reached almost 2.1m units in the July-December 2021 period. That represented a 4% increase compared to the first half of 2021, but a 15% decrease compared to the second half of 2019, according to GOGLA, a global association for the off-grid solar energy industry.

However there were large disparities between countries, with traditional market leaders Kenya and Ethiopia suffering further sales slumps, while Uganda, Zambia, Rwanda, Malawi and others reported strong growth.

In West Africa, sales of 586,000 units in July-December 2021 represented a 23% increase compared to the first half of 2021 and a 60% increase compared to the second half of 2019. Again, this positive looking picture hides national disparities, with strong growth in Nigeria, which represented two-thirds of sales in West Africa, outweighing poorer sales in the region’s smaller economies, GOGLA said.

This data mostly reflects sales of direct purchases of equipment such as solar lanterns or panels by consumers rather than via so-called pay-as-you-go (PAYG) solar services, which have continued to grow, but comprise a small part of the overall market.

With PAYG, customers effectively rent a panel and equipment that it powers, such as lights, rechargers, radios and televisions, from a provider company, typically on a two-to-three-year contract, after which time the customer owns the equipment and can get their power free of charge.  

Building a local supply chain

The pandemic may not have been kind to the industry, heaping extra costs on providers and hitting the spending power of customers, but lessons learned from it can be used to make the sector more resilient, according to sector specialists.

As with many other industries around …….

Source: https://african.business/2022/06/energy-resources/off-grid-solar-sector-seeks-to-rebuild-after-pandemic-shock/

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