Reliability and flexible payment are key drivers for off-grid market
Fragile and low-cost products challenge the solar market, but quality solar technology with flexible methods of payment outplay cheaper alternatives.
By: Iben Bjørgulf Antonsen
Off-grid solar technology is a growing market
The market for off-grid solar technology is growing. Lighting Global estimates that 130 million off-grid solar devices have been sold since 2010. But cheap and low-quality products represent a growing segment of the market, according to Hystra:
”Quality-verified* lantern players suffer from competition of low-quality cheap copycats and struggle to reassure customer on the quality of their products.”
Hystra, Reaching Scale in Access to Energy
* Quality-verified lanterns are products that have met quality standards in terms of durability, advertising of performance, and warranty, set by the Quality Assurance Program by Lighting Global
The inevitable question is: What makes people buy one product over another? Is it the price tag or are evaluations of quality a factor?
How is it possible to reach UN Sustainable Development Goal (SDG) number 7; energy access for all, by 2030?
More than 1 billion people live without access to electricity, and almost half must be electrified by decentralized renewable solutions, according to the International Energy Agency (IEA). Off-grid technologies will need to provide access to 55 million homes, and thereby play an essential role in reaching SDG no. 7, GOGLA estimates.
Durability as the most common driver of purchase
Alexandre Coster, director of the digital finance group specializing in financial inclusion, Baobab+, offer different financial plans for purchase of high-quality solar products in developing nations. Since 2015 the BRIGHT products have been available through Microcred’s banking network and Baobab+ stores in Senegal, Mali, Madagascar and Ivory Coast.
Alexandre Coster describes how there is a difference between on- and off-grid customers of solar energy products:
“People in urban areas are more likely to pay less and change products often, because they are not completely depended, but often connected to the grid. But people living off-grid in rural areas are more dependent on solar products. Off-grid and low-income customers clearly understand that it makes a lot of sense to pay more, if they get something of better quality that will work for many years.”
Alexandre Coster, Director Baobab+
This is exactly what the newest GOGLA report from july 2018 concludes. They study asked more than 2,300 customers of solar products why they choose their product over another. The conclusion was clear. The key criteria for favouring one product over another was durability and reliability of the system. GOGLA states that: “this indicates the quality of (…) products is well understood.” The study furthermore concluded that customers often seek higher quality after buying a unbranded, cheap solar product.
Easier access to solar power through Pay-As-You-Go
Another key criteria for choosing one solar product over another is a flexible payment method, GOGLA finds. Being able to pay for the solar products in installments instead of a high one-time payment makes it possible for more customers to purchase solar technology. Hystra argues, that the influx of solar products made of poor materials, failing after a short period of time, affects customer’s general trust and willingness to invest in solar energy products. But part of the solution is to offer manageable, small payments through Pay-As-You-Go (PAYGO).
The smart model of payment is simple: are payments not made, the product is automatically turned off until the economic settlements are done. When the solar product is paid in full, it will provide clean and free energy for a long period of time. This makes the product much more cost-effective than cheap alternatives with a short life span. Hystra believes, that this method of payment “has the potential to unlock demand on an unprecedented scale.”
All of BRIGHT’s solar products can be purchased with PAYGO. Off-grid households are able to buy a BRIGHT solar lamp through for example BaoBab+ for a small down payment, hereafter paying it off in regular installments.
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