The Global Off-Grid Lighting Association (GOGLA) says total investment in the off-grid solar sector reached $425 million in 2023, down 43% year-on-year. It says the industry must address the lack of financing at an early stage to meet development and climate goals.
Total investments in the off-grid solar sector reached $425 million in 2023, down 43% from the previous year, according to figures published by GOGLA.
The association said pv magazine there was a “significant anomaly” that distorted last year’s figures, when leading off-grid installer Sun King raised $330 million in equity. “However, it is worth noting that the sector must experience growth rather than stagnation to achieve development and climate goals,” GOGLA said.
A total of 85 companies have secured investments in 2023, consisting of $281 million in debt, $128 million in equity and $15.5 million in grants. Investments in the so-called productive use of renewable energy (PURE) segments were twice as high as in 2022, up to $65 million. PURE refers to the use of energy that increases the profitability of micro, small and medium enterprises through higher revenues and productivity.
Startups and seed companies in the off-grid sector had total investments of $148 million and $24 million in 2023, with PURE deals representing 34% of all startup investments, which GOGLA says reflects “growing confidence” in this segment, especially with regarding solar irrigation and cold chain technologies.
Off-balance sheet financing accounted for 75% of total committed debt amounts and could therefore become a viable financing mechanism for the sector, GOGLA said. innovation.
GOGLA said addressing the lack of funding at an early stage is imperative.
“While the sector has viable business models, resilient businesses and innovative technologies, challenges such as high inflation, interest rates and climatic and economic uncertainties remain. Collective action is essential to overcome these obstacles and reach the world’s poorest communities,” the spokesperson said.
Another report from GOGLA found that its subsidiaries, defined as device companies believed to represent about 28% of the total off-grid solar market, sold 8.96 million of their solar kits in 2023. This figure is approximately half a million less than in 2022, but the second highest annual figure recorded.
The association attributed the year-on-year decline to structural declines in South Asia and lower sales or slower growth in core markets in sub-Saharan Africa. It added that this figure puts the industry “off track from achieving its expected contribution to universal energy access.”
“Despite great resilience during Covid and subsequent years, the off-grid solar sector is seeing the impact of several macroeconomic factors that are slowing sales,” said GOGLA director Sarah Malm. “Affordability remains a major issue for the people we serve, so we are calling on development partners to redouble their support for the off-grid solar sector.”
GOGLA estimates that approximately 116 million people currently benefit from improved energy access through its off-grid solar power kits, which are often used to power fans, refrigerators, TVs and solar water pumps. About 109 million tons of CO2e have been avoided through the use of the kits, GOGLA added, equivalent to taking 28 coal-fired power stations offline for a year.
Earlier this year, a report from US impact measurement company 60 Decibels concluded that after-sales support is key to boosting off-grid solar energy.
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