At the end of last year, the sector came together at the Global Off-Grid Solar Forum 2022 (GOGSFE) to discuss critical industry issues. Performance and investment were top of the agenda. Sessions were held on profitability, consumer protection, early-stage equity, public funding, and climate finance. We realised that many people in, or interested in, the off-grid industry missed out on these insights. So, we took the lessons learned from our expert panellists and turned them into a short report, with powerful recommendations for action in the year ahead.
1. Keep believing
We are resilient. The last GOGSFE was held in February 2020, just before the world undertook life-changing responses to the COVID-19 pandemic. The off-grid sector did not escape unscathed. Yet, despite the economic and operational challenges, many companies have robust portfolios, strong sales, and impressive consumer protection practices. Some are profitable. This success can be emulated and scaled. Off-grid solar technology remains the fastest and cheapest way to bring electricity access to hundreds of millions of people.
2. We must overcome the equity gap
Off-grid companies operate in complex environments. Most target a customer base where most people are living in, or close to, poverty and require consumer financing to access off-grid technologies. PAYGo companies have found a way to serve these customers. Yet, the excitement of the ‘PAYGo early days’ has waned, and equity finance is in short supply. This lack of equity is the biggest bottleneck in the industry today. To turn the tide, PAYGo companies must improve their unit economics, development partners must provide technical assistance, and investors must remember that the potential of the market remains unchanged. PAYGo can enable the world’s poorest people to access life-changing products and services. The opportunity is vast. We must work together to plug the equity gap.
3. Customer protection is the foundation of success
As one of our panellists put it: “If the customer doesn’t like you, they won’t pay you”. Companies cannot succeed if their customers aren’t well-informed, satisfied with the product and service, and can afford the payments. What’s more, we now have the data to show that companies that serve their customers well are the ones that are flourishing. We know that high standards are possible. We know the tools and knowledge exist to help the industry achieve these high standards. Now is the time for companies and investors to double down on consumer protection.
4. Collaboration is key
To accelerate learning and maximise efficiency we need to coordinate program efforts at country level and internationally to ensure they are mutually supportive. Events like GOGSFE are useful, and we need more spaces and gatherings to help us align and learn together. With more collaboration, we can go further, faster.
5. Climate finance can be a game-changer for the off-grid sector, and the off-grid sector can be a game-changer for climate
The climate impacts of off-grid solar are becoming better known. It has outsized mitigation impacts, is a vital tool for adaptation – particularly for those most vulnerable to climate impacts – and is creating green growth, jobs, and productivity. These impacts can, and must, be reflected in greater access to climate finance. Fully monetising these positive impacts and engaging a wider range of climate-first investors will be a gamechanger, and must be a priority.
Unlocking Solar Capital Africa, in Kampala, Uganda, 31st May – 1st June 2023, will be the next major event to continue these discussions. We hope to see you there!