The Global Off-Grid Lighting Association (GOGLA) says total investment in the off-grid solar sector stood at $425 million in 2023, down 43% year on year. It says the industry needs to address a lack of early-stage financing to meet development and climate targets.
May 9, 2024 Patrick Jowett
Total investment in the off-grid solar sector stood at $425 million in 2023, 43% less than the year prior, according to figures published by GOGLA.
The association told pv magazine there was a “significant anomaly” that skewed the prior year’s figures, as leading off-grid installer Sun King raised $330 million in equity. “However, it’s good to note that the sector should be experiencing growth rather than stagnation to meet development and climate targets,” said GOGLA.
A total of 85 companies secured investment in 2023, consisting of $281 million in debt, $128 million in equity, and $15.5 million in grants. There was double the investment in the so-called productive use of renewable energy (PURE) segments than in 2022, reaching $65 million. PURE refers to uses of energy that increase the profitability of micro-, small- and medium-sized enterprises through increased income and productivity.
Startups and seed companies in the off-grid sector totaled investments of $148 million and $24 million in 2023, with PURE deals representing 34% of all start-up investments, which GOGLA said reflects a “growing confidence” in this segment, particularly in relation to solar irrigation and cold chain technologies.
Off-balance sheet financing accounted for 75% of the total committed debt amounts and therefore could become a viable financing mechanism for the sector, GOGLA said, but added that it remains predominantly accessible to industry leaders and called for wider adoptions to catalyze further growth and innovation.
GOGLA said that addressing the lack of early-stage financing is imperative.
“While the industry boasts viable business models, resilient companies, and innovative technologies, challenges such as high inflation, interest rates, and climatic and economic uncertainties persist. Joint action is essential to overcoming these obstacles and reaching the world’s poorest communities,” the spokesperson said.
Another report from GOGLA showed that its affiliates, defined as appliance companies thought to represent around 28% of the overall off-grid solar market, sold 8.96 million of its solar energy kits in 2023. This figure is around half a million less than in 2022, but the second highest annual figure recorded.
The association attributed the year-on-year decrease to structural declines in South Asia and lower sales or slower growth in core markets in Sub-Saharan Africa. It added that the figure puts the industry “off-track to achieve its projected contribution to universal energy access.”
“Despite showing great resilience during Covid and the following years, the off-grid solar industry is seeing the impact of several macroeconomic factors that are slowing down sales,” said GOGLA Executive Director Sarah Malm. “Affordability remains a major issue for the people we serve so we call on development partners to double down on their support for the off-grid solar sector.”
GOGLA estimated that around 116 million people are currently benefiting from improved access to energy through its off-grid solar energy kits, which are often used to power fans, refrigerators, TVs and solar water pumps. Approximately 109 million metric tons of CO2e have been avoided through the use of the kits, GOGLA added, the equivalent of taking 28 coal-fired power plants offline for a year.
Earlier this year, a report from US-based impact measurement company 60 Decibels concluded after-sale support is key to boosting off-grid solar.
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