Since 2010, the World Bank has published biennial reports quantifying the market potential of bringing light to households that have unreliable or no direct access to the electric grid.
The latest report details the expansion and global potential of the off-grid solar market, the surface of which has barely been scratched. Between 2010 and 2017, 130 million portable solar devices have been sold, cumulatively creating $3.9bn in revenue and seeing explosive market growth at an annual rate of 60 percent.
As big as the figures are, they only represent 17 percent of the potential global market for this type of appliance. The report also estimates aggregate savings of $5.2bn for households that have switched to solar from traditional fuel sources like kerosene.
Between 2010 and 2017, 130 million portable solar devices have been sold, cumulatively creating $3.9bn in revenue
Rising real incomes in South Asia (seven percent annually) and sub-Saharan Africa (three percent annually), as well as falling poverty rates in those regions, are going to be drivers for the market as people have more disposable income to spend on their energy needs.
By 2022, the solar sector is expected to grow to provide improved electricity access to 740 million people; a 105 percent increase from the 340 million it services today.
Expectations for individual customer spend have increased dramatically. In 2010, the average customer was expected to spend between $30 and $80 on a single solar product. Now, they have an estimated lifetime value of between $370 and $1,120.
Innovative financing models are also permitting a higher spend per customer, as they blunt the financial impact of each purchase and incentivise further business.
Challenges do exist in the market, however. In the absence of innovation, an overemphasis on easy-to-access markets would slow the future rate of growth due to the difficulty of servicing remote regions.
Voice of the market
Despite sizeable increases in the number of people who have been connected to the electric grid, many are still subject to unreliable power.
This coupled with high population growth in regions with poor power supply means a large off-grid market remains, regardless of improvements in energy infrastructure.
New users are not the only source of revenue, as existing customers will need to have their devices replaced every two to four years.
Additionally, customers in newly on-grid homes are likely to desire more over time, meaning not only multiple units but also upgraded systems, which will bring in more revenue per unit.