Solar energy market: Hope for rebound?

The off-grid solar energy sector in Africa has demonstrated incredible resilience in the face of the COVID-19 pandemic, with solar energy kit sales growing by 10% last year. Despite this promising growth, the annual market for appliances is still grappling with a sustained 19% decline since 2019. Dana Rysankova, Global Lead: Energy Access at the World Bank, recently spoke to CNBC Africa to shed light on the evolving trends in the solar market. The World Bank has just released a report, the Solar Market Trends Report, which provides a comprehensive analysis of the market dynamics following the unprecedented challenges posed by the pandemic. Rysankova emphasized that while the world has lost ground on energy access in the last two years, particularly impacting the 490 million people, mostly in Africa, using off-grid solar products, there is also a glimmer of hope on the horizon. She pointed out that had it not been for the pandemic, an additional 100 million people could have benefitted from these energy solutions. However, the sector has displayed resilience and is gradually picking up momentum once again, offering a chance to reach the 730 million people worldwide who still lack access to energy. Rysankova highlighted three key focus areas for driving recovery and bridging gaps in the off-grid solar market. Firstly, there is a need to expand the reach of off-grid solar markets to regions with limited commercial activity, ensuring that life-changing solutions are accessible to all. Secondly, addressing affordability barriers is crucial, especially for low-income rural households and smallholder farmers who face challenges in affording essential solar products. Smart subsidies and tailored financing solutions are essential to make these products more accessible. Lastly, increasing financing for local and small companies is paramount. While investments in the sector have been on the rise, there is a need to redirect some of these funds towards smaller, locally-owned businesses to foster growth and expand services to a wider population. Rysankova highlighted the role of development institutions like the World Bank in providing grants to smaller companies to strengthen their capabilities and enable them to access crucial financing in the market. She also stressed the importance of ensuring that investments are targeted towards countries with the highest energy access deficits, emphasizing the need for a more inclusive and equitable distribution of funds. Government interventions play a crucial role in supporting the off-grid solar market, particularly in sub-Saharan Africa. Many governments are already taking steps to adopt integrated approaches that support the expansion of off-grid solar solutions. Rysankova emphasized the importance of creating enabling frameworks, reducing taxes, and customs duties on solar products to enhance affordability and encourage private sector participation in delivering energy solutions to those in need. Overall, a comprehensive and collaborative effort involving governments, development institutions, and the private sector is essential to drive the recovery of the off-grid solar energy sector in Africa and ensure universal access to clean and sustainable energy.