Nairobi: Off-grid solar is the most cost-effective way to power 41% of people globally by 2030 who are still living without energy access, according to the latest report published by the World Bank.
Between 2020 and 2022, the sector already provided 55% of the new connections in sub-Saharan Africa, where over 80% of the unelectrified population lives.
The latest “Off-Grid Solar Market Trends Report (MTR) 2024” by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and GOGLA warn that a sixfold increase over current investment levels—or $21 billion—is required to realise off-grid solar’s potential to contribute to universal energy access. Otherwise, this opportunity will be missed. Under the current trajectory, 660 million people are projected to still be without electricity by 2030.
The MTR was presented at the plenary session of the biennial Global Off-Grid Solar Forum and Expo in Nairobi to over 1500 attendees, including 100+ policymakers, 100+ investors and development actors, and hundreds of companies across the distributed renewables sector.
“We must rewrite this story,” remarked Qimiao Fan, the World Bank’s Country Director for Kenya, Rwanda, Somalia and Uganda.
“Providing access to affordable, clean electricity is critical for lifting people out of poverty on a livable planet, and we must be bold in our commitment to doing so. The World Bank Group has therefore partnered with the African Development Bank to connect 300 million people to electricity across Africa over the next 6 years, under the Mission 300 initiative. Off-grid solar will play a critical role in reaching households, as well as accelerating electricity access for businesses, schools, and health centers, unlocking development across sectors.”
“With the Off-Grid Solar Market Trends Report, off-grid solar is again proven as the most effective route to reach almost 400 million unelectrified people, delivering life-changing energy solutions to power their homes, farms, businesses, and public services. The industry has shown tremendous resilience in challenging macroeconomic conditions. Companies, investors, governments, and development partners need to work together NOW to unlock the $21 billion needed to create a financially sustainable off-grid solar sector, that can scale, serve the hardest-to-reach and help achieve energy access and climate goals and ambitious initiatives like M300.” said Sarah Malm, Executive Director at GOGLA.
According to the report, 685 million people are still living in energy poverty. The number has grown for the first time in two decades and, without immediate action, 660 million people will remain without access by 2030. Off-grid solar solutions would be the most cost-effective way to reach 41% of them (398 million people).
The off-grid solar sector has shown tremendous resilience over the past two years in challenging macroeconomic conditions. As of 2023, off-grid solar solutions were estimated to benefit over 560 million people.
Despite soaring inflation and extreme currency devaluations, among other factors, more than 50 million OGS products were sold in 2022 and 2023. Market turnover reached $3.9 billion in 2022 and 3.8 billion USD in 2023.
The report indicates that only 22% of households lacking electricity can afford the monthly payment for a Tier 1 solar energy kit on PAYG (a monthly payment system that increases affordability for those users who can’t afford an upfront cash payment). In conflict-affected areas, where 64% of people lacking access live, prices to offer PAYG are 57% higher, making them even less affordable.
Investment into the off-grid solar sector reached a high of $1.2 billion during the 2022–23 period, largely driven by debt financing. However, a 6x increase in public funding is necessary: $21 billion to electrify all the 398 million people who would be most efficiently connected via off-grid solar. A further $74 billion would cover the addressable markets for solar water pumps, cold storage solutions, and Tier 2+ OGS solutions for Micro, Small and Medium-sized Enterprises (MSMEs).
Initiatives like Mission 300 from the World Bank and the AfDB to electrify 300 million people across Africa and integration of OGS in national electrification plans and energy transition plans indicate that off-grid solar is increasingly being recognized in the international agenda.
Companies, investors, governments and development partners need to work together to ensure off-grid solar fulfils its potential, enabling the achievement of SDG 7, and having a transformative impact on households, businesses, farmers and social infrastructure, the report said.
