Off Grid Solar Market- 5 Key Takeaways From 2024 Trends Report

1. Funding Needs

In a universal access to electricity scenario, USD 21 billion is needed to electrify all the 398 million people who would be most efficiently connected via OGS. Only USD 2.4 billion is needed to electrify more than one million schools and healthcare facilities that require electricity. A further USD 74 billion is needed to cover the total addressable markets for solar water pumps, cold storage solutions, and Tier 2+ OGS solutions for micro, small, and medium-sized enterprises (MSMEs).
The cost of electrifying households, farmers, businesses, and social infrastructure with OGS is affordable and attractive compared to alternative development pathways. Governments would need to cover only around 30–40% of the cost to unlock a further 60–70% in public and private co-investment, says the report.

2. PAYG Model Under Spotlight

The ‘Pay as you go’ model, preferred worldwide for OGS appliances and electricity access has its limits, claims the report.

Interestingly, Only 22% of households lacking electricity globally can afford the monthly payment required for a Tier 1 solar energy kit
on PAYG, while 49% would be able to afford it at a stretch. Tier 2 OGS products on PAYG are affordable for only 1%, and affordable at a stretch for 2%, of those lacking access.
Productive use appliances sold on PAYG remain unaffordable for most. Thus, somewhat like Microfinancing, the benefits of the PAYG model seem to have clear limits on making the kind of promised impact that gets them donor backing as well.

3. Solar Energy Kits Dominate Off Grid Sales

Solar energy kits (SEK) are bundled, pre-packaged systems that typically consist of a solar panel, battery, and charge controller, alongside LED lights, phone charging ports, radios, fans, or televisions. The SEK category includes solar lanterns and solar home systems (SHS).

In 2023, 40.5 million SEKs were sold, accounting for 79% of total OGS sales. The proportion of household and Small business appliances—fans and TVs— has risen from 13% in 2021 to 21% of total OGS sales in 2023. However, the overall share of quality-verified products in the total OGS market remains concerningly low, at around 27% of total OGS market share. That would indicate the chances of unhappiness with the products being sold/distributed eventually. Importantly, growth rates in sales stalled due to inflation and currency devaluation in affected countries.

4. Off Grid Solar’s Role In Cooling

Rural communities have diverse needs for sustainable cooling that can be served through off-grid solar solutions, including cooling units for food preservation (e.g., refrigerators, freezers, walk-in cold-storage), improved health and well-being (e.g., fans), and healthcare applications (e.g., vaccine refrigerators).
The report points out that an estimated 1.12 billion people, living in both rural and urban areas, are at high risk of the effects of extreme heat due to lack of access to cooling—resulting in negative impacts on living conditions and safety, food preservation, health, and the economy. An estimated 356,000 deaths in 2019 were a result of extreme heat; 620 million metric tons of food is lost annually due to poor cold chain infrastructure; 15% of healthcare facilities in Sub-Saharan Africa have no access to electricity; and the impact of extreme heat stress has led to an estimated global productivity loss of USD 2.1 trillion per year (1.7% of global GDP)—a trend that is likely to increase with climate change.

5. Missing Women in Designing Products,  Running of OGS Sector 

The report posits that Women are significantly underrepresented in the OGS value chain, particularly in technical and leadership roles. This underrepresentation is largely due to a lack of access to the education and skills needed to participate meaningfully in the sector.

The design of productive use appliances has also historically overlooked the needs and preferences of women. The limited involvement of women in the design and feedback processes for these products has created a disconnect between what is available in the market and
what is needed by female consumers. This gap hinders the effective use of these products and reduces their potential impact on women’s lives.

 

The report highlights the role of public funding, the global donors like GEAPP, Climate Fund, EnDev and other that have stepped up, and the multiple financial models that are being tried to enable faster spread and access to energy through OGS. However, clearly, much more needs to be done, even while questioning the failure to reduce prices across so many categories. A key reason is the lack of interest in building DC appliances at scale of course, but many other factors have been highlighted as well.