Solar PV (Solar Photovoltaic), a technology that converts sunlight directly into electricity is projected to surpass wind and hydro in providing capacity additions for renewable energy and grow up to 43% in the next five years, according to the latest International Energy Agency (IEA) report.
Off-grid capacity is forecast to triple – reaching over 3 000 MW by 2022 and will be used to power industries, in solar home systems (SHSs) and also serve as mini-grids driven by government electrification programmes, and private sector investments.
Sub-Saharan Africa and Asia are among the regions with rapidly developing renewable energy markets, 66% of off-grid energy units sold in Africa are covered by just Kenya, Tanzania and Ethiopia, according to 2016 data by World Bank, with the market driven by companies like Lumos, BBOXX, Mobisol and M-KOPA.
Although the continent has seen a growing trend of private players in the off-grid energy segment, there is still more investments needed in the sub-sector as experts have analysed that it is the sure and quicker way to plug the continents acute energy gaps, up to 620 million people in African do not have access to electricity.
Grid-connected megaprojects such as large dams and power pools are essential to scale up national and regional energy generation and transmission, but they are slow and expensive and governments have been called not to leave this entirely to the private sector but to also step up investment in off-grid and mini-grid solutions.
Energy storage in emerging markets worldwide is expected to grow by 40% each year over the next 10 years. Investors for Sub-Saharan Africa are encouraged to act quickly in order to gain the first/early Mover advantage considering that some private sector companies which have invested in the market are already prospering.
The private sector is also innovating around this space to create customer friendly products, for instance MTN and Lumos–the largest off-grid solar energy service provider in Africa launched a digitalised system, the Mobile Electricity Service and the Y’ello Box-a device that transforms the solar energy into electricity.
Consumers will have to subscribe and pay for the service by using mobile phonecredit and a simple text message, this service was launched in Nigeria earlier this year and it is available at MTN stores across Nigeria.
Using pay-as-you-go (PAYG) solar, BBOXX has brought solar energy to the rural population in rural Districts of Rwanda, starting from Rwamagana, Less than 20% of Rwandans use electricity.
African’s urban electrification stands at only 60% whereas rural electrification is about 14%, BBOXX alone has brought power to over 130,000 homes and businesses in 35 countries in a period of just four years, aiming for more than a million by 2020.
The company is also making money by offering customers accessories it designed to minimise energy use, like shavers, smart phones and a 24-inch television that consumes 11 watts of power compared to an equivalent Western model which consumes 24 watts.
Others are Mobisol, a Berlin-based company that has installed 85,000 units in Tanzania and Rwanda, Off Grid Electric, based in San Francisco that serves 50,000 homes in Tanzania; and M-KOPA, a Kenyan company that has provided power to over 500,000 homes in Kenya, Uganda and Tanzania.
Normally, a customer initially pays around $30 for basic home system and then pays about $0.30 to 0.50 a day for low energy consumption and about $2 for higher. Payments are largely done through mobile money systems to enforce cashless economy in Africa.
Of the 315 million people who will gain access to electricity in Africa’s rural areas by 2040, it is estimated that only 30 per cent will be connected to national grids, as most will be powered by off-grid sources or mini-grid systems.
Due to the existing energy gaps the sub-sector still presents massive potential for investors, the market is still largely open for innovation around product development, distribution, service provision among others.