Off-grid bringing power to millions

solar-energyPicture an island in Bangladesh that is so remote that there is no way the traditional electricity could reach it. Not now, and probably not anytime soon. That was the situation in Monpura just a few years ago – but not today.

Today, Monpura is thriving, thanks to solar power. Markets are abuzz, households can power TVs, fans and even refrigerators, and streets are lit up at night. In fact, solar home systems have helped take electricity to more than 20 million people in rural Bangladesh.

The off-grid solar market, quite simply, has changed lives.

Only a decade ago, just a handful of solar products existed that were of verified quality, and of these, most could only provide limited lighting. While the prices for these products have dropped dramatically, a wide range of modern products of reliable quality have also flooded the market and are now available across the world.

Today, off-grid solar products are reaching over 360 million people globally. This may seem like a huge number, but this is only 17% of the global market potential. These life-changing products hold tremendous promise for reaching the more than 1 billion people who lack access to electricity, or for the additional 1 billion who live with unreliable or insufficient electricity service.

This potential, clearly, is not lost on investors and entrepreneurs – they’ve raised $1 billion in financing for off-grid solar in the past five years. It has also quickly been embraced by governments around the world, from Bolivia to Bangladesh, Kenya, Vietnam and so many others.

Over the past 8 years, the World Bank Group has committed $1.3 billion to off-grid programs – mostly based on solar technologies – in developing countries around the world, with a focus on communities in Sub-Saharan Africa and South Asia, which are home to the largest populations without access to electricity.

This work has resulted in lessons that have helped refine the organization’s approach to off-grid solar.

For example, the Lighting Kenya initiative helped develop a market for off-grid products and services in the country, characterized by a diversity of companies and business models. But when it became clear that only a few of these products were reaching poor, remote areas, the Bank Group helped set up a working capital facility for local off-grid companies to help them expand their reach by offering a wider range of financing options, such as pay-as-you-go, to their customers. This offset the higher costs of serving these remote households.

A similar financing facility was set up in Ethiopia for off-grid solar product importers, which helped the Ethiopian off-grid market become one of the largest in the world.

In Haiti the Bank Group helped the government set up an Off-grid Electricity Fund with support from the Climate Investment Funds to provide equity, debt and grants to companies, facilitating doing business in a fragile country environment.

These models are now being replicated across many other countries, including a regional facility for West Africa.

Many of these efforts have been informed by the Lighting Africa program, which established a global benchmark for product quality assurance standards. By building confidence in markets and breaking down barriers of entry for businesses, Lighting Africa was instrumental in helping over 23 million people in Africa meet their basic electricity needs.  Capitalizing on this success, the Bank Group is now supporting off-grid solar markets and mobilizing private financing across the world through the Lighting Global platform, with funding from the Energy Sector Management Assistance Program (ESMAP) that in turn has helped leverage considerable private funding.

There is great momentum in this sector today. New companies, technologies, and more energy-efficient products are being launched every year. New frontiers are being explored in solar irrigation, milling, and cold storage – productive uses of energy that can transform rural areas by improving incomes and creating livelihoods.

Much more is required if we are to reach the more than 1 billion people who live without electricity. To get there, we need redoubled efforts from governments, private investors, innovators and international institutions. But if the off-grid solar market is any indication, what was once thought insurmountable is now becoming possible.

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