Affordable alternative to grid: New report shows the potential of solar power

Trends demonstrate that companies in the off-grid solar sector continue to expand into new geographies and underserved markets.

Over 420 million people are benefitting from the off-grid solar energy and the sector has grown into USD 1.75 billion annual market, a new report by the World Bank Group in association with GOGLA showed.

The summary of the report was unveiled on Day 1 of Global Off-Grid Solar Forum & Expo 2020 being held in Nairobi, Kenya. While talking about the report, Russel Sturm from International Financial Corporation (IFC) and one of the authors of the report said, "Every two years we take the pulse of the industry and we come together as an industry ... its astounding to see the innovation that has taken place in 12 years."

Sturm said to Devdiscourse that connecting to the electric grid is an unaffordable and time-taking option for rural people who still lack an electric connection. "To reach 420 million people with an electric grid by expanding it into rural areas would take a lot longer compared to the 12 years it took to achieve this with solar," he added.

Being an affordable and faster alternative, the off-grid solar sector remains on a solid growth curve. To date, more than 180 million off-grid solar units have been sold worldwide and the sector saw USD 1.5 billion in investments since 2012.

Explaining how the off-grid solar sector has developed over the years, Dana Rysankova from World Bank Group's Lighting Global talked about how the catalog of solar power products has changed, from offering only small lanterns a decade ago to selling complete solar home systems which are available in the market now.

Trends demonstrate that companies are moving into new geographies and underserved markets as established markets become more saturated. These companies are also shifting towards larger, higher-margin solar home system sales in response to growing consumer demand for appliances and back-up systems.

Rysankova also said that the sales of these larger solar systems have been fueled by the success of the pay-as-you-go model. "Previously one of the major issues, why people couldn't afford larger systems they only could afford lanterns, was the upfront cost (which) was just too much," she said to Devdiscourse on the sidelines of Global Off-Grid Solar Forum & Expo 2020. 

Pay-as-you-go model, on the other hand, allows users to pay overtime according to the usage which makes the option viable to rural people.