The Global Off-Grid Solar Market growth has slowed down post-COVID-19

GOGLA’s latest report into the global off-grid solar market sales shows the sector has continued to grow in the first half of 2022. Global sales of solar lanterns, multi-light systems and solar home systems are almost back to highest sales levels recorded in the second half of 2019. While sales in most appliance categories have shown growth, the trends vary considerably by country and technology type. The off-grid solar sector association thinks that much greater sales volumes are needed for the off-grid solutions to reach their full potential and help achieve SDG7 electrification targets.

Before the COVID-19 pandemic hit, the cost of off-grid solar was decreasing and the target market economies were growing. Since the pandemic though, potential customer income has shrunk while product prices have increased. While companies in the off-grid sector have shown resilience and an ability to adapt and innovate, persistent supply chain challenges and increase inflation continues to hinder growth.

To reach the SDG7 goal of universal electrification by 2030, the off-grid sector has to not only reach first time electricity users, but also provide replacement products for existing off-grid solar customers. But, the prolonged decrease in sales volumes caused by the pandemic, as well as products reaching their end of lifespan and requiring replacement, means the return to growth is only gradually contributing to increased energy access.

Global off-grid solar market sales and impact

The Global Off-Grid Solar Market Semi-Annual Sales and Impact Data report shows that global sales of solar energy kits reached 4.33 million units. This represents a 9% increase from the second half of 2021. This is also 25% higher than sales reported a year ago. This growth has been driven by cash sales which reached close to 2.8 million units sold. Around 86% of cash sales during the first half of 2022 were solar lanterns. The report attributes this growth in part to higher than usual sales to the humanitarian sector. “While precise data about the share of off-grid solar sales going to the humanitarian sector is not available, large bulk purchasing orders to fragile and conflict-affected countries such as Afghanistan, Ethiopia, Syria, Yemen can be identified. While a large portion of these sales were to the Middle East, bulk purchases were also identified in South Asia, Sub-Saharan Africa and Ukraine.

PAYGO sales stagnated at 1.5million units sold. This is still 27% higher than last year. Also, many markets in Sub-Sahara Africa typically show higher sales during the second half of the year. Sales trends varied markedly across geographic region and appliance type. Global lantern sales grew by 11% compared to the second half of 2021 to reach 2.8 million units. Multi-light system (MLS) sales grew by 12% to 891,000 units. Solar home system (SHS) sales on the other hand decreased by 3% to 639,000 units: 11-20 Wp system sales decreased by 2%, 20-49 Wp sales have decreased by 28%, 50-100 Wp SHS sales grew by 20% and 100+ Wp products sales decreased by 9%.

Key appliance sales vary markedly across regions and type

Global sales of key appliances (TVs, fans, refrigeration units and solar water pumps) recorded a 164% increase compared to the second half of 2021This jump in sales is tied to a sharp increase in fans sales reported in South Asia . This is both because of an increased participation of companies in the data collection and actual growth reported by companies. Fan sales grew from 134,000 units sold versus the last reporting round to 698,000 units sold. This increase is reflective of increased participation of companies in South Asia, and high demand for energy efficient fans in key markets like Pakistan. Across Sub-Saharan Africa, 80% of fans were sold bundled with a power system – usually a SHS – and are also more likely to be sold via PAYGo.

TV sales continue their decreasing trend, dropping by 7% to 183,000 units sold.This trend is tied to lower or stagnant sales in the SHS segment capable of powering TVs in East Africa. The vast majority of TV sales are to Sub-Saharan Africa (99%) where they are predominantly bundled with SHS, of which 98% are sold on a PAYGo basis.

Refrigeration unit (RU) sales grew 25% to 2,779 units sold between January and June 2022.However, this figure remains low, especially given increased participation of companies reporting sales of this appliance category. Solar water pump (SWP) sales grew 42% to 9,370 units sold. This is the highest sales volume reported since 2020. However, increased participation of SWP manufacturers in this data collection round is a contributing factor.

Regional trends in East Africa

In East Africa, solar energy kits sales reached just over 2.2 million units This presents an 8% increase compared to the second half of 2021.This growth is partly enabled by strong results in Kenya, Ethiopia and Zambia, while many other markets saw decreased sales during the first half of the year, likely due to seasonal patterns. Key appliance sales for East Africa decreased by 14% to 106,000 units sold as TV sales continue to contract. The region recorded increased sales of RUs (973 units) and SWPs (7,100 units).

West Africa’s off-grid solar profile is changing rapidly

In West Africa, total solar energy kit volumes increased by 8% compared to the previous reporting round, reaching 632,000 units. Growth in West Africa is almost solely driven by Nigeria, with the country representing 74% of regional sales and 20% growth compared to the second half of 2021. In the first half of 2022, 152,000 key appliances were sold, a 60% increase on the previous reporting round. This is the first time half-year sales of off-grid solar appliances in West Africa exceeded sales in East Africa.

Gogla attributes this growth to Nigeria “where the sector has notably benefited from the national electrification programme (NEP) enabling accelerated growth in a country that still has a large untapped market. “Appliance sales have also benefit from this growth as TVs and fans sold in Nigeria are generally bunded with SHS. The fact that West Africa has overtaken East African can be attributed to this success story in Nigeria plus to the fact that Kenya, the largest market for appliances in East Africa, has had a much slower recover. Plus, to the fact that in West Africa we record significant sales of TVs and fans, while we don’t really see much appetite for fans in East Africa.”

Source:ESI

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