Global LEAP and the Emerging Off-Grid Appliance Market
Apr 25, 2016
Matt Jordan, Senior Manager, CLASP
The appliances and end-use devices sold with and powered by off-grid energy systems are essential to our industry’s dual goals of building strong off-grid clean energy markets and changing the lives of underserved households and communities. To reach its full potential, the global off-grid clean energy market needs a complementary market of high-quality, highly energy-efficient appliances that meet off-grid consumers’ needs at least cost. However, the off-grid appliance market is relatively new and is inhibited by many of the issues that typically impact young, developing markets.
As a contribution to global clean energy access goals, the Global Lighting and Energy Access Partnership (Global LEAP) – a Clean Energy Ministerial initiative led by the U.S. Department of Energy – is coordinating efforts to facilitate the development of a strong, competitive market of high-quality, super-efficient off-grid appliances.
As is the case with solar portable lighting and pico solar, product quality and durability are essential to the growth and stability of the off-grid appliance market. Off-grid energy systems provide big and immediate improvements to quality of life, but also require a major investment from households with very limited disposable income. High-quality appliances help ensure that the energy services in which off-grid consumers have invested are delivered reliably. Experiences with inferior products and the companies selling them are quickly shared with others, decreasing consumer confidence and undermining efforts to build self-sustaining, robust commercial off-grid markets.
Why is Energy Efficiency Important in Off-Grid Appliances?
Energy efficiency is just as important. Most of the cost of off-grid energy is attributable to energy supply like solar PV and batteries. Super-efficient off-grid appliances radically reduce the need for energy supply investment, lowering prices and opening up vast new markets of consumers who could otherwise not afford off-grid energy services.
A recent analysis by experts at Lawrence Berkeley National Laboratory, Humboldt State University, and the University of California found that super-efficient appliances can reduce the total cost of providing off-grid electricity services by as much as 50%.
Just as we’ve seen with the adoption of super-efficient LEDs in off-grid lighting, super-efficient appliances have a major role to play in lowering prices, expanding energy access markets, and delivering the benefits of modern energy services to off-grid consumers.
Why are Off-Grid Appliances Important to Energy Efficiency?
In the end, it may not simply be that energy efficiency enables clean energy access markets—clean energy access markets may in turn have significant impacts on energy efficiency.
The economics of off-grid clean energy are unique:
Expensive but cost-effective energy, the payment terms of which are typically front-loaded;
Limited energy supply; and
Extraordinarily poor, price-sensitive consumers.
Because of these factors off-grid entrepreneurs have extraordinary demand for energy efficiency, which radically reduces upfront and lifecycle costs, extends run times, and makes energy services affordable for their customers. And this demand is unique: no other market places as much emphasis on the importance of energy efficiency.
Clean energy access markets hold incredible potential to teach the entire world how to better consume energy—not simply by pioneering new business models for distributed renewables, but by driving innovation that prioritizes energy efficiency. A recent analysis suggests that “innovation in the development of appliances for off-grid applications should lead to a major acceleration of energy efficiency improvement rates globally, potentially doubling the global rate of improvement in energy efficiency technology.”
I’m optimistic that this isn’t just theory. Recently, an executive of a prominent off-grid company told me “We’re always working with suppliers on the efficiency of their products. There are cheap, easy things manufacturers can do to make appliances more energy efficient. But when I ask them why they haven’t done so already, they say ‘Nobody has ever asked us to.’”
What will we learn about energy efficiency if we’re successful in scaling this market that has such strong demand for it?
Matt Jordan is a Senior Manager at CLASP, an NGO focused on appliance energy efficiency and market transformation, where he leads their Clean Energy Access program. CLASP serves as Operating Agent for several Global LEAP activities.