Sharp sales growth predicted for Africa’s off-grid solar energy – African Business
November 2nd 2021
The growth of the off-grid energy sector over the last decade has been one of Africa’s social and economic success stories, transforming lives overnight by bringing power to low-income households and small businesses, often in remote areas with little prospect of a link to the national grid.
Inevitably, that expansion has been curtailed by the economic impact of the Covid pandemic on the spending power of poor Africans, whose finances have become more precarious. Some have struggled to keep up payments on pay-as-you-go solar systems, while others are deferring plans to splash out on solar lighting and television packages until their earnings prospects become more secure.
At the same time, off-grid solar providers have found it harder to borrow the funds needed to stay afloat in difficult times, contending with customer growth rates well below those envisaged in their business plans prior to the pandemic, and low equipment stock levels due to fractured global supply chains.
In its Market Trends Report 2020, the World Bank’s Lighting Global Programme reported that the global off-grid sector had developed into a $1.75bn annual market, serving 420m users, mainly in sub-Saharan Africa. In the 2017-19 period, off-grid solar firms’ revenues grew at 30% a year, while sales volumes grew at 10% a year, Lighting Global estimated.
By 2021, the picture was very different. GOGLA, an off-grid industry trade body, said in its latest Global Off-Grid Solar Market Report that two thirds of off-grid solar lighting companies surveyed around the world reported lower sales volumes in the second half of 2020 compared to the second half of 2019, and that a third had reported sales cuts of more than 50%.
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Poised for recovery
However, companies with a track record in the African off-grid market say that, while business is challenging now, there are signs of resilience and recovery.
Simon Bransfield-Garth, chief executive of African household solar provider Azuri Technologies, said recently that, while the company’s business volume growth had slowed considerably from pre-pandemic levels of some 40-50% a year, its sales volume was still showing modest growth, and was likely to accelerate quickly if customer and investor confidence returned.
This view is backed up by GOGLA data showing some recovery in SSA markets in the second half of 2021 compared with earlier in the year. In East Africa, sales of 2.2m off-grid solar lighting products by surveyed members in the second half of 2020 were 10% lower than in the second half of 2019, but 41% higher than in the first half of 2020.
In West Africa, sales of off-grid solar products in the second half of 2020 totalled 434,000 – a 19% increase over the same period in 2019 and a 23% rise compared to the first half of 2020.
If African economies do recover …….