Off-Grid Solar Market Trends

Key messages from the report

Key Concept: OGS product categorization

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This report divides the total OGS market into three broad OGS product categories: solar energy kits, household and small business OGS appliances, and productive use OGS appliances.

Solar energy kits (SEK) are bundled, pre-packaged systems that typically consist of a solar panel, battery, and charge controller, alongside LED lights, phone charging ports, radios, fans, or televisions. The SEK category includes solar lanterns and solar home systems (SHS).

• Solar lanterns (capacity rating: < 3 Watt-peak [Wp]) are portable, small-scale lighting devices powered by solar panels, primarily used for single-point illumination and often phone charging in off-grid areas.
• Smaller SHS (capacity rating: 3 to 49.99 Wp) are solar-powered setups typically designed to provide electricity for multiple lights and small appliances such as fans
• Larger SHS (capacity rating: 50 Wp and above) are more comprehensive solar-powered setups to power multiple rooms of lighting and multiple or larger devices such as TVs or refrigerators in homes and small businesses

Household and small business OGS appliances are energy-efficient devices specifically designed to operate with off-grid solar systems, such as fans, radios, and televisions and other small devices powered by solar electricity. For this report, we focus on the sale of TVs and fans, as they represent by far the largest share of household and small business appliances sold by volume.

Productive use of electricity (PUE) OGS appliances are solar-powered devices that drive incomegenerating activities, boosting productivity and fostering economic growth in off-grid regions. For this report, we focus on solar water pumps (SWPs) and refrigerators, since these are the most mature PUE appliance categories.

Global Sales Volumes and Market Turnover

The total OGS market grew 36% from 2021 to 2022, surpassing pre-COVID-19 levels, and then stabilized in 2023, showing only a modest 3% decline and demonstrating the market’s resilience. The remarkable growth experienced in 2022 was driven by a surge in demand following the end of the COVID-19 emergency that particularly affected solar lanterns, smaller solar home systems (SHS), and fans. Growth plateaued in 2023, despite inflation, currency depreciation, and increases in the cost of living, which exacerbated affordability challenges.

In 2023, 40.5 million SEKs were sold, accounting for 79% of total OGS sales. The proportion of household and SME appliances—fans and TVs— has risen from 13% in 2021 to 21% of total OGS sales in 2023. Demand for SHS sold bundled with appliances grew particularly in areas with intermittent grid access. There was also a significant increase in fan sales, driven partly by companies reporting increased sales and partly by companies that previously did not report sales data newly choosing to do so.

In 2022, the total OGS market size reached an all-time total high of USD 3.9 billion in turnover, a remarkable 32% growth from the previous year and surpassing pre-COVID levels by 15%. This surge was primarily driven by a 10–13% increase in sales volumes across a range of solar products, including solar lanterns and smaller SHS, alongside a slight uptick in consumer pricing. However, in 2023, the market saw a slight contraction, with turnover dipping to USD 3.8 billion—a modest 3% decline compared to 2022.

The slight decline in sales in 2023 can be attributed to global macroeconomic challenges and a deteriorating economic outlook, which have intensified affordability issues. In particular, higher local prices for SEKs, driven by inflation and currency depreciation, made products less affordable and reduced demand across many markets

Affiliate Market Insights

Key Concept: ‘Affiliate’ vs. ‘non-affiliate’ OGS companies

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This report distinguishes between ‘affiliate’ and ‘non-affiliate’ off-grid solar products and companies.

Affiliate companies are connected to any of the partner organizations involved in the semi-annual GOGLA sales data reporting process. This matrix of companies includes GOGLA members, companies selling products that meet VeraSol quality standards, and appliance companies that participated in the Global LEAP Awards or are engaging with the Low Energy Inclusive Appliances (LEIA) program.

Non-affiliate companies are those that fall outside the matrix of affiliate companies. These companies do not report their sales to GOGLA, and much less is known about the quality and level of energy access that their products provide as measured on the Multi-Tier Framework (MTF). Non-affiliate companies consist of manufacturers that sell directly to smaller distributors and retailers, often bypassing formal importation channels.

The overall share of affiliate products in the total OGS market remains concerningly low, at around 30% of total OGS market share.

SEKs have made up over 80% of total affiliate sales on a yearly basis.This ratio peaked at 91% of total sales in 2021 likely due to the purchases by humanitarian organizations during COVID-19. Smaller OGS systems represent most of these sales. In recent years, households and SME appliance sales appear to have grown, with a CAGR of 53.5% between 2021 and 2023—although this is in part due to additional companies choosing to provide fan sales data. PUE appliances continue to account for a marginal portion of the market, chiefly due to ongoing affordability challenges.

East Africa remained the largest market for affiliate sales, accounting for approximately 46% of the total volume. Kenya saw continued growth in OGS sales, likely due to the reinstatement in 2021 of a tax exemption which had been removed in 2020, as well as targeted programmatic initiatives. Zambia experienced increased demand driven by (i) load-shedding, which led to greater reliance on backup solutions, and (ii) more consistent implementation of duty and VAT waivers.

West Africa demonstrated significant momentum and was the only region among those with established markets to continue growing in 2023.This growth was largely driven by the expansion of SHS sales in Nigeria where rising fuel costs, along with supportive initiatives like the Nigeria Electrification Program (featuring a USD 75 million results-based financing facility) and the Solar Power Naija Program, spurred robust growth.

In South Asia, sales are on the decline, primarily due to advancements in grid electrification. Sales were largely driven by substantial humanitarian purchases in Pakistan and Afghanistan.

From 2021 to 2022, all SEK product categories experienced exceptional growth in the rebound from COVID-19. Solar lantern sales increased 26%, those of smaller SHS increased 29%, and those of larger SHS increased a robust 48% .

Fans remain the leading OGS household and small business appliance with 1.3 million units sold in 2023. Sales are driven by the affordability of such products, their limited energy needs, and their ease of distribution. TV sales are gradually returning to pre-COVID levels. After a 17% decline between 2019 and 2021, TV sales are now 8% below 2019 levels.

OGS product pricing

Local currency prices surged in 2023, driven by high inflation, and the sector passed on a portion of these costs to consumers Retail prices show substantial variation among distributors and countries, influenced by factors such as currency depreciation and devaluation, and inflation. For instance, in Nigeria, local currency prices for some VeraSol-certified solar lanterns have increased from 91% to as much as 300%. Similarly, in Kenya, price increases for solar lanterns have ranged between 15% and 207%, reflecting the broader volatility in pricing across the sector.

USD prices however, indicate an estimated 3% decrease for OGS products compared to 2022, due to declining costs of solar panels and batteries. This price decline reflects broader trends in the solar industry, where technological advancements and shifts in manufacturing capacity have led to cost savings. The cost of Chinese-made solar panels, which dominate the global market, dropped by a remarkable 42% in 2022. Similarly, battery prices have also seen a significant reduction, decreasing by 14% from 2022 to 2023. However, reductions in hardware costs have been partially offset by increases in distribution costs due to several factors, including the difficulty of ensuring commercial viability and lack of skilled labor.

With the exception of solar water pumps, simpler systems have seen USD price reductions while larger and more complex systems have seen price increases. Prices for solar water pumps, portable solar lanterns, and smaller SHS decreased in USD prices. Conversely, larger solar home systems and televisions saw respondents reporting medium to large increases in prices. Refrigeration units and fans had varied results, with no clear trend dominating the responses, while prices for solar water pumps decreased. The significant variability in the responses suggests differing regional market conditions and supply chain dynamics affecting companies unevenly.

Affiliate Market Trends for Productive Use OGS Appliances

In this report, productive use of energy (PUE) OGS market analyses focuses on the most mature productive use product categories: small-scale refrigeration and SWPs for irrigation.

SWPs have experienced high sales growth since 2021, with a 34% compound annual growth rate (CAGR). This is likely due to relative technological maturity and programmatic interventions promoting their use. SWP sales have been driven by improvements in consumer awareness and development programs specifically targeting SWPs.

By contrast, refrigerators have seen a slower growth rate of 4% CAGR, likely due to slower technological advancement, higher average cost, and lower perceived returns on investment. Affordability remains the main barrier to market growth. Concerns around durability and ability to repair, as well as uncertainty around whether asset acquisition will lead to increased incomes, limit sales.

New data highlight that solar lanterns and home systems play a significant role in income generation. An average of 16% of solar lanterns and 12% of solar home systems are used for both residential and income-generating purposes. Affordability, portability, and ease of setup make solar lanterns and home systems highly adaptable for business purposes

Market Trends for Social Infrastructure

Very little data are available on the size of the OGS market for social infrastructure. OGS can provide health facilities with lighting and power for appliances such as vaccine refrigerators, while providing schools with computers and internet access. This often saves facilities money on fuel for generators. However, growth in the use of OGS for public social infrastructure has been hampered by affordability and customization challenges.

OGS Market Landscape and Dynamics

Mergers and acquisitions have increased in the market.These strategic mergers and acquisitions indicate a trend toward consolidation within the OGS sector, where companies are leveraging acquisitions to enhance their market positions and extend their reach into new regions.

OGS companies that have diversified their businesses—or focused on an innovative business model—have seen improved commercial performance. Several companies have also been exploring alternatives to PAYG to reach more consumers. Examples include energy-as-a-service (EaaS), in which users pay a monthly fee to use a solar product but do not own that product, and rental models where in customers rent batteries or charged solar products for short periods of time from solar kiosks or hubs.

The OGS landscape is showing signs of both market consolidation and increased specialization. Some companies are choosing to specialize in particular segments of the value chain, while others are expanding into new areas. For example, companies like M-KOPA have shifted to focus exclusively on white-label manufacturing.

The renewable energy sector in Sub-Saharan Africa, including OGS, is facing a significant shortage of skilled labor required for the sale, installation, operation, and maintenance of these systems.Recent surveys indicate that 78% of respondents in the OGS sector view the “limited skills” challenge as a notable impediment to their expansion efforts. The problem is particularly severe in remote areas, which often have the largest populations living without electricity access.

A survey performed among OGS companies—both large and small—reveals the perceived key barriers to expansion. Most small and mid-sized companies reported that access to funding was a significant challenge. This issue is far less prevalent among large global companies, which have better access to both local and international financing sources. This imbalance in access to funding creates a significant growth bottleneck for smaller players in the sector.

Consumer affordability and payment reliability also emerge as critical challenges across the board, particularly in smaller markets. The survey shows that more than half of respondents view these factors as either a significant or moderate challenge, suggesting that while there is demand for OGS products, consumers’ ability to make consistent payments remains a barrier. These affordability issues are exacerbated by broader macroeconomic trends, such as inflation and currency fluctuations, making it even harder for companies to expand.

Finally, factors like limited workforce skills and rising technology costs further constrain the sector. About half of the respondents cited limited workforce skills as a significant challenge, highlighting the need for greater technical and operational expertise at the local level. Increased technology costs, driven by global supply chain disruptions, also emerged as a growing concern, affecting companies’ ability to offer affordable products while maintaining profitability.