Until recently renewables have been a luxury enjoyed only by relatively few people. This is changing rapidly, however, according to a new report by the World Bank.
The “2020 Off-Grid Solar Market Trends” report suggests that off-grid solar (OGS) has been witnessing some of its best years ever, growing by around 30% every year and reaching a $1.75 billion annual turnover in 2019.
While growth in many other sectors means huge benefits to the rich and little benefit to the poor, the situation isn’t quite the same with solar.
Today, small and medium-sized OGSs are among a few ways to meet the needs of over 800 million people that still lack access to clean and affordable energy. To overcome energy poverty, we need projects that build the capacities of local actors to install off-grid solar energy systems, including both financial and technical assistance, as well as effective knowledge-sharing.
Riccardo Puliti, the World Bank’s regional director on infrastructure in Africa, explains how the organization is taking part in this process. “We are scaling up our support to client countries by helping them leverage this potential through innovative and financially sustainable solutions,” he says.
OGS is expected to serve 823 million users by 2030, providing a crucial contribution to achieving clean and affordable energy for all. Getting there requires 13% or higher annual growth over the next decade with particular attention to meeting climate targets and real social needs.
To “bridge the affordability gap.” $11 billion in finance is still needed, with 30% coming from public investments and 70% from external investors as equity, debt and grants. This means combining well-targeted demand-side subsidies with supply-side incentives.
With just $1.5 billion in investments since 2012 and a lack of funding experienced by second- and third-generation companies, this remains a huge hurdle to overcome in years to come. The report also emphasizes the need for more enabling policies and avoiding the burden of over-regulation.
Meanwhile, positive trends are already ongoing. The shift towards the Pay-As-You-Go services model comes with more diverse and high-quality energy services. The report also emphasizes the significant potential of solutions like solar water pumps, cold storage, and solar mining, which greatly benefit the operations of public institutions, micro-enterprises, households, and farms.
The report highlights that out of 180 million off-grid solar systems sold since 2010, 84 million are well in use today, serving over 420 million people worldwide.
Koen Peters, executive director of GOGLA, is optimistic about current trends. “This report is another confirmation of the significant impact off-grid solar has already achieved, and the massive opportunity that remains going forward,” he says.
Paired with the rising competitiveness of renewables in general and rising demands for clean energy, it looks like the rapid development of OGS systems is highly wanted.