GOGLA Report 2020: ‘Slow, Uneven Recovery of Off-grid Solar Industry’

The recently released July-December 2020 edition of the Global Off-Grid Solar Market Report analyses off-grid solar lighting sales trends during a 6-month period in East Africa, West Africa, Central Africa, South Asia, East Asia, and the Pacific, amid the current global pandemic. It finds that the off-grid industry is showing early signs of a slow but uneven recovery from the economic shock triggered by the COVID-19 pandemic.

The Global Off-Grid Solar Market Report is a market intelligence series on sales and impact of off-grid solar lighting products, sold by GOGLA and Lighting Global affiliates. It is published biannually by GOGLA (Global Off-Grid Lighting Association) and The World Bank Group’s Lighting Global program.

The latest report analyses data from July – December 2020 and reveals that off-grid solar lighting sales grew by 19% compared to the first half of the year, totalling 3.6 million products sold. Yet sales are still at the lowest level since 2015. The sector’s growth is far from the rate needed to achieve universal electrification targets by 2030. Appliance sales, meanwhile, plateaued at 470,000, with numbers failing to reach the levels of growth anticipated before the global health and economic crisis. Looking at 2020 as a whole, the drop in market growth due to the impacts of COVID-19 resulted in an estimated 10- 15 million people and 300,000 – 450,000 enterprises missing out on improved energy access.

The report also shows that the easing of lockdown restrictions in many countries in the second half of 2020 contributed to increased sales volumes compared to the first half of the year. Strong consumer demand in many markets, despite the additional cash constraints placed on off-grid households as a result of the pandemic, also demonstrated the importance that energy poor homes and businesses continued to place on off-grid solutions.

Aside from the COVID crisis, challenging conditions such as extreme weather, political events, and fiscal changes on one hand, and positive initiatives such as relief funding and new programs on the other, added to the complex picture behind the global headlines.

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Looking at sub-Saharan Africa (SSA), sales of lighting products in the second half of 2020 were only 4% below the levels seen in the second half of 2019, but regionally and nationally there was significant diversity. In the largest, East African, market, sales volumes were still 10% below those seen in the second half of 2019, while sales in West Africa and Central Africa showed a 19% and 40% increase, respectively. East Africa saw the smallest dip (5%) whilst bigger drops were seen in West Africa (11%) and Central Africa (32%). However, looking at specific technologies, positive signs also emerged, such as the increase in the sale of solar water pumps in West Africa.

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In contrast to the more positive overall picture in SSA, sales of off-grid lighting in South Asia remained 43% lower than those seen in the second half of 2019. This is in large part due to the continuation of low sales rates in India. Key drivers for these were the extension of localised lockdowns until the end of August, and difficulties faced by micro-finance institutions (MFIs) – the main sales channel for off-grid products in the country. Across the region, the industry saw a growth in the sale of fans but a decrease in the sale of televisions and solar water pumps when compared to the second half of 2019.

Only a third of solar lighting companies reported stable or increased sales compared to the second half of 2019, with more than half reporting sales decreases of over 25% and a third reporting sales reductions of more than 50%. These reduced sales volumes and the wider impacts of the pandemic continued to add pressure on off-grid companies, with some previously buoyant enterprises reporting zero, or low, sales in the second half of 2020.

To reinforce the sectors’ foundations and propel growth, government, development partners, and investors must incorporate lessons learnt and strengthen their support. Governments must provide the right environment for businesses to thrive and for their citizens to access clean, safe energy and appliances, development partners must adapt and enhance their programmatic and financial support, and the investment community must continue to work with companies to develop innovative financing mechanisms. Crucially, given the extent of the economic impact of the pandemic on the sector and its customers, there is a role for an immediate increase in the availability of grant and concessional financing.

The study argues that the off-grid sector can help power recovery from the COVID-19 pandemic, drive climate resiliency and enable a billion people to switch to clean energy technologies. It supports enterprise, boosts household income, and enhances the welfare of some of the world’s poorest communities.

The report ends on the conclusion that if the market is protected and enhanced, the impact and environmental wins will be myriad.