At the first investor conference of its kind, the Global Off-Grid Lighting Association (GOGLA) launched the Investment and Finance Study for Off-Grid Lighting on July 7, 2014 at Credit Suisse’s St. Peter Forum in Zurich. The study reviews the market for solar off-grid lighting products and concludes that improved financing can promote industry growth. The study was prepared in collaboration with A.T. Kearney, sponsored by the GIZ and supported by Quadia, Solar Energy Foundation, and SolarAid.
The market consists of about 1.3 – 1.4 billion people at the bottom of the pyramid who have no access to electricity. This group’s primary sources of light are kerosene lamps, candles, and battery-operated flash lights. By comparison, modern solar lamps offer lower cost, better quality of light, and improved social and environmental impact.
Currently, this group invests an estimated $ 30 billion per year buying kerosene for lighting purposes. The cost to supply equivalent light with solar equipment is estimated at $ 2.7 billion. This frees up $ 27 billion to use elsewhere, such as further investments in solar systems. The study asserts that the long term market for SHS and accessories is as big as $ 50 billion.
While the solar off-grid products market is growing, improved financing of the industry’s relatively high working capital needs could help it grow faster. There are already several established solutions for meeting this financing need; however, none of them are considered best practices and there remains room for more innovative solutions.
The study concludes that each investor group can play its role in the effort to grow this industry in a win-win way and offers some innovative ideas. From angel and philanthropic investors to established banks and private equity, the industry has the potential to offer attractive returns.
The full report can be downloaded here.
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