COVID-19 causes 26% drop in Off-grid solar sales, slowing energy access

GLOBAL – Like almost all industries, the off-grid solar (OGS) industry has been adversely impacted by the COVID-19 pandemic, resulting in a 26% drop in sales of off-grid solar lighting products, a new report by GOGLA has shown.

According to the report, first half of 2020 saw sales of off-grid solar lighting products fall to 3 million compared to 4.1 million in the first half of 2019.

Sales of most off-grid solar appliance types also saw decreases despite of their importance in providing essential energy access for millions of households and businesses in developing countries.

Sales were particularly affected by stringent measures to combat the pandemic which were particularly acute in Asia.

Sales of off-grid solar lighting products in South Asia fell to 495,000 units, a 57% decrease, and to 74,000 in East Asia & Pacific, a 49% drop.

A slowdown in sales was also seen in East Africa (11% decline to 1.6 million) where the economic impact of COVID-19 was exacerbated by the worst locust swarms for decades and heavy flooding in key markets.

 Sales of off-grid solar solutions however, remained stable in West and Central Africa, with 354,000 and 130,000 units respectively.

When looking at investment, the first part of 2020 saw $198 million in commitments by 31st August – comparable to the rate of investment seen last year.

The worrying trend though is the continued concentration of funds into a small number of investors raising worries about the sustainability of such a model in future.

Accoriding to the GOGlA report, Between January – August 31st 2020, 75% of investment was made to only 3 companies.

Grant funding was also concentrated, albeit from the investor side, with 3/4 of grant capital coming into the market from a single source.

Perhaps most concerning, though, is the effect of a slowdown in growth on energy access and other development impacts.

Naturally, with less products sold, fewer families are accessing clean, safe electricity and more households are left with expensive or dangerous alternatives such as kerosene.

At the national level, positive impacts on employment, economic opportunity and income generation are being missed.

At the global level, challenges for the off-grid industry could derail efforts to achieve a clean energy transition that leaves no one behind.

Despite the setbacks experienced during the COVID-19 pandemic, Off-grid solar remains the fastest, cleanest and most affordable way to unlock hundreds of millions of people from energy poverty.

The report notes that Companies must thus be safeguarded in the short-term to avoid operational and staff losses that cannot be regained easily.

According to GOGLA, to power the COVID-19 recovery and avoid losing 10 years of energy access progress a concerted, ambitious and strategic long-term effort to protect and promote the sector is also needed.

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