Providing modern off-grid solar solutions to increase access to sustainable electricity
About 733 million people worldwide cannot access safe, affordable, and reliable energy. They often have no alternative but to turn to expensive traditional solutions such as kerosene lamps, which provide low-quality lighting and can harm their health. Since 2015, the Off-Grid Solar/Lighting Global program has been one of the key pillars of ESMAP’s energy access activities. The program was initially part of ESMAP’s support to Lighting Africa and facilitated direct energy access, through off-grid solar technologies, to more than 420 million people.
According to the 2020 Off-Grid Solar Market Trends Report, several factors need to be considered for the off-grid solar sector to close the gap of universal access by 2030. They include accelerating market development efforts and providing public funding, including end-user subsidies, to close the affordability gap.
ESMAP’s Lighting Global/Off-Grid Solar program is designed to increase access to clean, reliable, and sustainable electricity provided by modern off-grid solar solutions.
Some of the program’s activities include:
- Providing support to governments to effectively integrate off-grid electrification in the national electrification strategies and programs.
- Building an enabling environment and supporting quality assurance by assisting governments in adopting and implementing international standards for off-grid solar products such as portable solar lanterns, solar home systems, and solar-powered productive use applications.
- Leveraging the private sector across and beyond the countries in the Africa region to support market-driven approaches with a scale-up potential.
- Developing market-compatible solutions for reaching the “last mile” consumers in remote, sparsely populated areas.
- Supporting inclusive and gender-transformative approaches through end-user subsidies to leave no one behind.
- Creating solutions for complex business environments, including fragile and conflict-affected settings.
- Promoting technology and business model solutions for larger loads, particularly for productive and community uses.
- Building the capacity of the key sector stakeholders.
The program carries out its activities by leveraging World Bank lending to the public sector to build enabling environments. It also extends financing to the private sector to deliver modern electricity services to off-grid users. In addition, the Off-Grid Solar/Lighting Global program promotes innovation and knowledge sharing across stakeholders and geographies. It has created synergies through partnerships with IFC and other key stakeholders and development partners.
Activities managed under the Off-Grid Solar/Lighting Global program are developed under the Lighting Global brand through six key components: quality assurance, market intelligence, access to finance, private sector development, consumer awareness, and policy and enabling environment.
In September 2001, ESMAP, through its Off-Grid Solar/Lighting Global Program, contributed to a US$68 million relief fund to protect energy access from Covid-19 fallout in vulnerable communities. This facility involves more than a dozen public and private financiers and is designed to provide emergency capital to energy access companies. These companies serve more than 20 million low-income households and micro-businesses in Sub-Saharan Africa and Asia who have been reporting severe financial distress due to the COVID-19 pandemic. EARF’s emergency financing provides relief loans to help alleviate pandemic-related financial distress. It aims to stabilize the renewable, off-grid energy sector by providing these companies with vital liquidity as they work to continue operations, retain staff, and recover from the economic crisis caused by the pandemic so that they can continue to deliver on their potential to provide energy to millions. The Off-Grid Solar /Lighting Global Program supported the facility’s design, focusing directly on its ability to provide a coordinated and agile response to the pandemic’s threat to accomplish the targets to achieve the SDG 7 Goal. In addition, EARF prioritizes smaller and female-led companies that are often faced with a challenge when accessing finance in a period of great uncertainty. ESMAP contributed a catalytic US$2.2 million in grant funding. Without this critical grant provision, EARF would not be able to operate on a non-commercial basis and offer concessional interest rates to small companies.
The Off-Grid Solar/Lighting Global Program has collaborated with ESMAP’s Leave No One Behind and Improved Livelihoods and Human Capital programs to support the Recovery of Electricity Services project, designed to restore reliable and affordable electricity access in Yemen. The project uses an innovative design leveraging micro-finance institutions (MFIs) to focus on off-grid solar solutions. The Off-Grid Solar/Lighting Global Program provided financing for a technical expert embedded with the project team to support the transition to a market-based, results-based financing approach where MFIs managed their supply. This involved helping to develop revised call guidelines, application forms, and financial templates. One of the project’s key outcomes is an increase in the sales of off-grid products. The project has also improved awareness of business opportunities in Yemen among international manufacturers, encouraging them to explore partnerships with qualified Yemeni importers and MFIs. It also introduced an additional incentive to promote inclusivity by making credit on sales available to female customers. This increased the proportion of female beneficiaries and the proportion of consumer financing to households that cannot afford to pay the full price upfront.
During Fiscal Year 2021, most of the Off-Grid Solar/Lighting Global program activities centered on pandemic response. As part of its knowledge-sharing activities, the program released two key publications:
- Energy Requirements for COVID 19 Testing provided technical guidance for sustaining cold chains essential for COVID testing and vaccine delivery (July 2020).
- Requirements and Guidelines for Installation of Off-Grid Solar Systems for Public Facilities (May 2021).
In addition, the following knowledge products were advanced in Fiscal Year 2021 and are expected to be completed in Fiscal Year 2022
- In Fiscal Year 2021, the Gender and Energy Program and Lighting Global co-led the production of the Toolkit for Gender Equality in the Off-Grid Solar Sector. This toolkit, launched during the second quarter of Fiscal Year 2022, describes various ways to close gaps within the off-grid sector regarding entrepreneurship, jobs, and at the consumer level. The report distills findings from an extensive literature review, a global stocktaking exercise, key informant interviews, and case study reviews.
- PAYG Policy Toolkit was developed for government policymakers, development agencies, and development practitioners interested in identifying policy approaches to support the scale of Off-Grid Solar solutions, including pay-as-you-go (PAYG). Government policies can help or hinder the growth of Off-Grid Solar and PAYG. In the case of PAYG products, relevant policies reach beyond the energy sector to telecommunications and financial services and broader issues such as data privacy and consumer protection. This toolkit facilitates inter-ministerial dialogues to create a coordinated policy environment that supports consumers using Off-Grid Solar to meet their electrification needs. The initial draft was completed in April 2021, and the kit is undergoing a twelve-month field test in Uganda and Ethiopia. The toolkit will be published during the testing period, incorporating lessons learned.
- Achieving Energy Access through Off-Grid Solar: The Use of Public Funding will provide government and development partners with a comprehensive overview of the tools available to channel public funding to the off-grid solar sector to accelerate electricity access. Recommendations on the design and implementation are distilled from emerging lessons learned, covering World Bank and other development partner experience, supply and demand-side subsidies, and policy and regulatory support. The draft was completed in Fiscal Year 2021. The final draft was scheduled for peer review in September 2021, and the report’s launch is planned for end of 2022.
- The Off-Grid Solar/Lighting Global program also supports the biannual Off-Grid Solar Sales and Impact Data Report, produced by the Global Off-Grid Lighting Association (GOGLA).