BNEF Launches Off-Grid & Mini Grid Market Outlook

Emerging Economies Deployed Around 1.4 To 2 GW Of PV <1 MW Systems in 2016
06:19 AM (Beijing Time) - 12. January 2017

Key Takeaways

  • Small scale solar is a big opportunity waiting to be explored,especially in the emerging or remote markets, reports Bloomberg New Energy Finance (BNEF) in its inaugural report titled ‘Q1 2017 Off-Grid and Mini-Grid Market Outlook’
  • Countries like Pakistan and Nigeria imported PV modules and cells from China that exceeded the amount needed for their utility-scale project pipeline since January 2016
  • Pay-as-you-go model is very popular with private equity firms, while companies selling solar kits for cash do not seem to be finding favor with the investors as of now

Off-grid and mini-grid market has been growing slowly but steadily in emerging or remote markets. Since January 2015, an estimated 1.4 GW to 2.0 GW of small scale solar (below 1 MW capacity) has been deployed in emerging economies, as per the estimate of Bloomberg New Energy Finance (BNEF) in its new report on the subject. Pakistan and Nigeria are among the largest emerging markets, having imported $276 million and $23 million of PV modules and cells from China since January 2016, exceeding the amount needed for their utility-scale project pipeline. This does not include integrated or plug-and-play solar kits.

Envisaging the growing importance of distributed energy and electrification in emerging markets, BNEF has come out with a new quarterly report series. Focused on emerging or remote markets, the inaugural report titled ‘Q1 2017 Off-Grid and Mini-Grid Market Outlook’ puts the spotlight on Nigeria and India.

In Q4/2016, two Africa focused private equity firms invested more than $60 million in start-ups Mobisol and Lumos Global that sell larger solar home systems than the original pioneers of the so-called pay-as-you-go model. Lumos is, moreover, ‘tightly integrated’ wit a mobile phone operator, indicating that ‘telecom operators may use their reach to to distribute solar products.’ The pay-as-you-go model of solar power access continues to bag huge sums from private sector funds.

There were, however, no significant investments into companies selling solar kits on a cash basis, most financing rounds went exclusively to solar kit companies offering consumer financing products. This affects cash-sale companies owing to limited inventory financing, primarily in Tanzania and Ethiopia. The report states, “Such bottlenecks create opportunities for competitors, primarily generic lantern manufacturers, to capture market share.”

Donors and development banks are more forthcoming in disbursing funds to this segment, as compared to private investment. The Asian Development Bank (ADB) has announced that it would lend more than $1.1 billion to distributed energy initiatives in India, Pakistan and Sri Lanka. This includes $325 million for off-grid electrification in Pakistan.

According to BNEF between January and October 2016, PV exports from China to emerging markets amounted to $3 billion. $142 million of branded off-grid solar lighting kits were sold in H1/16 and 21MW of PV projects for emerging-market community mini-grids were announced since April.

In general, companies operating in the space are now preparing for larger scale deployments, says the report.

The 15-page report can be downloaded here

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani