Game changers needed to achieve SDG 7

Explore what constitutes a game changer for the OGS sector, how some of them have changed since the last MTR, and what some potential game changers for the sector moving forward could be.

Photo credit: Sun King

What is a gamechanger

A game changer is a business model, financing instrument, technology, policy and regulation, or market trend that has the potential to accelerate OGS industry growth and plug the gap to SDG7.

Summary of how 2024 game changers could address challenges in the off-grid solar sector

Note: The game changers chart was originally published in the 2020 MTR and included in the 2022 MTR as a recap. This chart includes game changers that were previously identified in those editions, alongside additional game changers identified in 2024.

Some opportunities identified in the 2020 and 2022 MTRs have not developed as expected.Strategic investor engagement - particularly of energy conglomerates - proved to be less promising than initially anticipated. Investor appetite to invest in scaling up household solar solutions is less than expected due to uncertainty about the sector’s commercial viability. Investor interest has shifted toward the productive use space, particularly among philanthropic investors such as GEAPP. The availability of PAYG has improved, which has helped to drive first-time access, but affordability constraints are increasingly limiting the model’s reach. Technological innovations, such as the internet of things (IoT), continue to improve offerings but their impact on company margins has been minimal relative to the negative effects of macroeconomic headwinds such as currency fluctuations and inflation.

Game changer descriptions

While some of the game changers identified in 2020 have not developed as expected, multiple game changers continue to hold significant potential to accelerate universal access to electricity.

Off-balance sheet financing: This mechanism refers to transferring distributed assets to a bank or third-party investor, thereby removing them from a company's balance and freeing up capital for further investments while keeping debt levels low, which helps maintain financial ratios that are attractive to investors.
Availability of subsidies (including CCF). Consumer and supply side subsidies to lower the cost of products to support market development and address affordability challenges
Higher margin products. OGS companies improve profitability by selling higher margin products (typically higher power systems, including appliances)
Improved repayment rates. . OGS companies focusing on the quality of sales, rather than the quantity of sales, to increase payment collection, reduce bad debt and mitigate other credit-management challenges
Demand aggregation mechanisms. Increasing access to productive-use OGS products, particularly in underserved areas, by either consolidating purchasing power to lower costs or providing more effective routes to reaching customers
Impact-linked concessional finance.Financial support provided under more favourable terms than commercial financing, with conditions directly tied to the achieve of specific impact-based outcomes
Upfront grants. Grants provided to OGS companies, typically smaller companies facing capital constraints, supporting them to maintain commercial viability and encourage market development – particularly in FCV or nascent markets
Technical Assistance. Providing sector-specific expertise, guidance and business development support to enhance company performance
Technological innovation. Continued improvements in OGS product efficiency, durability and reparability, positioning them to better compete with current alternatives, both technologically and financially
Strengthened data analytics.mproved use of techniques and tools to analyze and interpret data to facilitate better customer identification, better serve more nascent markets, and support the development of more robust and granular national electrification plan – potentially supported by AI
Multi-country financing facilities. Facilities with regional credit lines but with a single pool of funding, and centralized systems and processes to enable smaller, country-level projects to benefit from aggregation and economies of scale in fund management
Long-term services. The contractor, such as a government entity, engaging local operators to install and oversee the long-term O&M of OGS-powered social infrastructure
Tailored financing instruments for smaller companies. The provision of financing aimed at supporting small to mid-sized companies, that typically can’t absorb larger tickets
Local currency financing. Financing in the local currency of the company`'`s operational country or the currency of receivables to mitigate against FOREX fluctuation risks
Public-private partnership models A potential collaborative approach to providing long-term, low-cost energy access, by using public subsidies to provide the initial capital for financing, and private companies to distribute, operate and maintain the products and collect ongoing revenues to create a sustainable, self-funded model.