Key messages from the report
- OGS is gaining momentum on the international agenda; the World Bank and AfDB have made a joint commitment to electrify 300 million people across Africa, creating an opportunity for governments to access financing for new OGS programs from multilateral development banks.
- Recognizing the sector’s role in climate adaptation, mitigation and resilience, governments continue to integrate OGS into national electrification plans and are starting to integrate OGS into energy transition plans.
- Although some countries are introducing new tax exemptions for the sector, others are rolling them back.
- While many countries are adopting quality standards, implementation challenges are preventing these standards from driving up the proportion of quality-assured products in the market. Since the last MTR, the VeraSol quality assurance program supported ECOWAS, the political and economic union of 15 West African states, in adopting quality standards for OGS products that are harmonized with the International Electrotechnical Commission.
- An estimated 58 OGS programs use VeraSol product certification linked to the IEC quality standards as eligibility criteria. These programs represent at least USD 411 million in donor investment available to companies with VeraSol-certified products.
- Governments are starting to address challenges around OGS e-waste management through their national-level policies and initiatives.
- Most governments have yet to actively address gender inclusivity in the OGS sector through state programs or policies.
- Some governments are increasing their efforts to promote local OGS manufacturing.
OGS has been increasingly important in the international agenda and national electrification plans
The international agenda increasingly is recognizing the importance of off-grid solar (OGS), creating an opportunity for governments to access financing for new OGS programs from multilateral development banks. At COP27, the World Bank announced the Distributed Access through Renewable Energy Scale-up (DARES) platform, a multi-stakeholder collaboration across the World Bank, IFC, MIGA, and other development partners to engage the private sector in ramping up the rate of electrification via distributed renewable energy, including OGS, in SubSaharan Africa. The World Bank has since started to implement the objectives of the DARES platform through several projects, including the Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) project and DARES Nigeria. ASCENT is a multiyear, multibillion-dollar project aimed at expanding access to clean and sustainable energy across Eastern and Southern Africa. It aims to provide electricity access to 100 million people and clean cooking technologies to 20 million people. In parallel, the Nigeria DARES project aims to provide electricity access to over 17.5 million Nigerians through renewable solutions (including OGS) in a USD 750 million initiative—the World Bank’s largest-ever single-country distributed energy project.
Governments continue to integrate OGS into national electrification plans and policies, sending a powerful signal of commitment to the private sector and helping to boost investment. Several countries have taken this step since the last MTR, while others are reviewing and updating existing plans. Governments are starting to integrate OGS into energy transition plans, recognizing the sector’s role in climate adaptation, mitigation, and resilience. In all of these plans, governments see a clear role for OGS in keeping emissions low as electricity consumption rises, especially in rural areas, and in supporting the transition to renewables in the power generation mix.
Although some countries are introducing new fiscal incentives for the sector, other countries are rolling them back. Tax incentives, such as VAT and duty exceptions, help improve affordability by lowering product prices. Many countries, such as Nigeria and Sierra Leone, already have VAT or duty exemptions in place. More recently, in early 2024, Cameroon’s government introduced in the country’s Finance Law custom duty exceptions for key photovoltaic (PV) components of rooftop solar systems, while Liberia has renewed an executive order to suspend tariffs on OGS products. However, some countries have chosen to remove tax exemptions for the OGS industry. Sierra Leone, for example, re-introduced a goods and services tax (GST) on solar equipment in 2023, while continuing to exempt these items from import duties.
In addition, several key developments are emerging across areas such as quality standards, gender inclusivity, e-waste management, and local manufacturing:
- Quality standards: While many countries are adopting quality standards for OGS products, implementation challenges are hindering their effectiveness in raising the proportion of quality-assured products in the market.
- E-Waste management: Governments are beginning to address the challenges around OGS e-waste management through state-run programs or national-level policies.
- Gender inclusivity: Most governments have yet to take significant action to promote gender inclusivity in the OGS sector through dedicated programs or policies.
- Local manufacturing: Lastly, some governments are ramping up efforts to promote local manufacturing within the OGS sector.