A $21-billion increase over current investment levels is required to realise the off-grid potential of solar power to contribute to universal energy access, according to the latest ‘Off-Grid Solar Market Trends Report’ (MTR) 2024, published on October 8 by the World Bank’s Energy Sector Management Assistance Programme (ESMAP) and the Global Off-Grid Lighting Association (Gogla). 

The report shows that investment into the off-grid solar sector reached a high of $1.2-billion during 2022/23 period, largely driven by debt financing. Under the current trajectory, 660-million people are projected to still be without electricity by 2030, and a six-fold increase in solar investment is required to resolve this issue.

Moreover, a further $74-billion would cover the addressable markets for solar water pumps, cold storage solutions, and Tier 2 and up off-grid solar solutions for small, medium-sized and microenterprises. 

“The World Bank group has . . . partnered with the African Development Bank to connect 300-million people to electricity across Africa over the next six years, under the Mission 300 initiative. Off-grid solar will play a critical role in reaching households, as well as accelerating electricity access for businesses, schools and health centres, unlocking development across sectors,” World Bank country director for Kenya, Rwanda, Somalia and Uganda Qimiao Fan said.

The report considers off-grid solar to be the most cost-effective way to power 398-million, or 41%, of energy-deprived people globally by 2030. The solar energy sector already provided 55% of the new connections in sub-Saharan Africa between 2020 to 2022, where more than 80% of the unelectrified population lives.

“Off-grid solar is . . . the most effective route to reach . . . unelectrified people, delivering life-changing energy solutions to power their homes, farms, businesses and public services. The industry has shown tremendous resilience in challenging macroeconomic conditions.

“Companies, investors, governments and development partners need to work together . . . to unlock the $21-billion needed to create a financially sustainable off-grid solar sector, that can scale, serve the hardest-to-reach and help achieve energy access and climate goals and ambitious initiatives like Mission 300,” Gogla executive director Sarah Malm said.

The report says that 685-million people are currently living in energy poverty. This number has grown for the first time in two decades.

As of 2023, off-grid solar solutions were estimated to benefit more than 560-million people. Despite soaring inflation and extreme currency devaluations, among other factors, more than 50-million off-grid solar products were sold in 2022 and 2023, with a market turnover that reached $3.9-billion in 2022 and $3.8-billion in 2023. 

However, the report notes that affordability remains a critical barrier for most households, with only 22% of the energy-deprived being able to afford the monthly payments for a Tier 1 solar energy kit.

In conflict-affected areas, where 64% of people lacking energy access live, pay-as-you-go prices for off-grid solar solutions are 57% higher, making them even less affordable.

The report said that companies, investors, governments and development partners needed to work together to ensure off-grid solar could fulfill its potential and have a transformative impact on households, businesses, farmers and social infrastructure.