26 October 2015

OFF-GRID SOLAR
LIGHTING MARKET
TRENDS
4th International Off-Grid
Lighting Conference

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26 October 2015

ESTIMATED ANNUAL SPEND ON OFF-GRID LIGHTING

AND PHONE CHARGING (2014, USD BN)
AFRICA

ASIA

2.6

0.1

18.0

2.1

11.5

0.8

0.8

4.0

0.1

12.7

2.2
0.9

0.8

4.7

KeroseneKerosene Battery Candles

lamps torches

Mobile Pico-PV
phone
charging

Total

Note: mobile phone charging assumption: one weekly charge at $0.20. Technology
breakdown is based on UNEP estimates for 2010. Solar lighting expenditure refers
to Lighting Global quality-verified products only.
26 October 2015

Kerosene Kerosene Battery

lamps
torches

Candles

Mobile Pico-PV
phone
charging

Total

Source: Bloomberg New Energy Finance, UNEP

2

ESTIMATED SALES OF BRANDED PICO SOLAR

LIGHTS (MILLIONS OF UNITS, CUMULATIVE)

19.9

16.0
11.4

12.1
9.8

8.6

5.7
0.1

0.4

0.6

FY

H1

H2

2009

2010

0.9

1.4

H1

H2

2011

2.1
H1

3.4
1.8
1.6

3.4
2.2

H2

H1

2012

7.6

5.4
3.2

4.5

6.3

H2

H1

H2

2013

Note: Data is based on sales data of Lighting Global quality verified product, conversations with and announcements of
other market players and BNEF estimates for reporting gaps.
26 October 2015

Africa
Asia

2014

8.5

H1

2015

Source: Lighting Global, Bloomberg New

Energy Finance
3

ESTIMATED SAVINGS FROM QUALITY-VERIFIED

PICO-PV SYSTEMS SOLD BETWEEN JULY 2014
JUNE 2015 (USD BN)

Africa

Asia

Kerosene expenditure

Kerosene
256

Phone charging
expenditure

Phone
11
charging

Retail cost of solar

Retail cost of
solar

Net savings

Net savings
202

10

-64

Note: The figures represent GOGLA social impact tracking metric 5b. Assumes single solar light systems replace one
kerosene light and SHS replace two kerosene lanterns with running costs between $11-40/light, depending on the country
and kerosene subsidies. Assumes mobile phone charging costs of $0.20 and one charge per week per household. Solar
product lifetime = 1.5 times warranty period. Refers to sales of Lighting Global quality-verified products only.
26 October 2015

96

-51

56

Source: Bloomberg New Energy Finance,

LightingGlobal, GOGLA, UNEP
4

SALES OF LIGHTING GLOBAL QUALITY-VERIFIED

SOLAR LIGHTS (MILLIONS OF UNITS)

2.9
2.4

1.8

2.0

2.0

Asia

0.9
0.2
H1

0.4

0.5

H2

H1

2011

2012

Note: Lightly coloured figures are estimates.

26 October 2015

H2

Africa

H1

H2

2013

H1

H2

2014

H1
2015
Source: Lighting Global, Bloomberg New
Energy Finance
5

WHY DID SALES DROP IN H1 2015?

Hypothesis 1:
Data limitations

26 October 2015

Not all companies report all the time

The market can be cyclical and one period not
representative

WHY DID SALES DROP IN H1 2015?

Hypothesis 1:
Data limitations

Not all companies report all the time

The market can be cyclical and one period not
representative
Inventory financing constraints

Hypothesis 2:
Structural challenges

26 October 2015

Correlation with interventions

Dependence on a small number of large
players

PICO-PV MARKET CONCENTRATION BY SOLAR

LIGHTING SEGMENT (HERFINDAHL HIRSCHMAN
INDEX)
Uncompetitive markets
Mobile phone operators (China)

5,335

Lighting Global-verified solar lighting

4,943

Breakfast cereal manufacturing (US)

2,999

Branded off-grid solar lights (BNEF estimate)

2,908

Motor vehicle (US)

2,323

Mobile phone operators (US)

2,260

Personal current accounts (UK)

1,800

Mobile phone operators (India)

Meat retailing (US)

1,552

1,004

Solar lighting including generics (BNEF estimate) 474

Note: HHI = Herfindahl-Hirschman Index, a measure of market concentration. The US Department of Justice uses the
HHI to assess mergers and considers any value above 1000 to represent either a moderately or highly concentrated
market. HHI estimates for off-grid solar refer to cumulative historical market size over 2009 - H1 2015.
26 October 2015

Source: Bloomberg New Energy Finance,

Lighting Global, US Census data, Ofcom
8

KENYA: LIGHTING AFRICA INTERVENTIONS AND

SALES OF LIGHTING GLOBAL QUALITY-VERIFIED
SOLAR LIGHTS (THOUSAND UNITS)

Kenya consumer
awareness
campaign starts

and ends

970
626

57
2010

85
2011

213
2012

202
2013

2014

2015

Source: Lighting Global

26 October 2015

WHY DID SALES DROP IN H1 2015?

Hypothesis 1:
Data limitations

Not all companies report all the time

The market can be cyclical and one period not
representative
Inventory financing constraints

Hypothesis 2:
Structural challenges

Hypothesis 3:
Market broadening

26 October 2015

Correlation with interventions

Dependence on a small number of large
players
Have the pioneers succeeded in catalyzing the
first markets?

10

ESTIMATED LIGHTING GLOBAL QUALITY-VERIFIED

PICO SOLAR LIGHTING SALES, AFRICA AND ASIA
(MILLIONS OF UNITS)

Lighting Global
quality verified

0.2

0.4

0.5

H1

H2

H1

2011

1.8

2.0

H1

H2

2.4

2.9
2.0

0.9

H2

2012

2013

H1

H2

2014

H1
2015
Source: Lighting Global, Bloomberg New
Energy Finance

26 October 2015

11

ESTIMATED BRANDED PICO SOLAR LIGHTING

SALES, AFRICA AND ASIA (MILLIONS OF UNITS)

Other brands

3.6

2.3
0.3

0.5

0.7

H1

H2

H1

2011

3.9

2.9

Lighting Global
quality verified

1.2

H2

2012

H1

H2

2013

H1

H2

2014

Note: Data for Lighting Global associates and other brands represents BNEF estimates based on interviews and other
reported figures.
26 October 2015

3.9

Lighting Global
associated
companies

H1
2015
Source: Lighting Global, Bloomberg New
Energy Finance
12

LIGHTING GLOBAL QUALITY VERIFIED PICO PV

SALES, AFRICA ONLY (MILLIONS OF UNITS)

1.8
1.6
1.3

Other SSA

1.4
Nigeria

Ethiopia
0.8
Tanzania

0.6
0.2

Kenya

0.3

0.1
H1

Africa except
Kenya
H2

2011

H1

H2

2012

H1

H2

2013

H1

H2

2014

Note: Data for Lighting Global associates and other brands represents BNEF estimates based on interviews and other
reported figures.
26 October 2015

H1
2015
Source: Lighting Global, Bloomberg New
Energy Finance
13

Increased competition in frontier markets brings with it many

benefits for the consumer; it keeps prices low; ensures a
variety of choice; increases availability and builds awareness.
[]

This huge surge in competition has meant SunnyMoney

themselves are under threat and have needed to quickly
reassess its role in this hugely vibrant market.
Source: http://www.solar-aid.org/tanzania-andthe-price-of-success/ . Emphasis added.
26 October 2015

14

SOURCING ON ALIBABA

600-700 suppliers that seem set up to ship

off-grid solar lighting kits readily
Source: Bloomberg New Energy Finance,
Alibaba.com
26 October 2015

15

ESTIMATED TOTAL PICO SOLAR LIGHTING SALES,

AFRICA AND ASIA (MILLIONS OF UNITS)
9.7
8.0

Generics
(BNEF
estimate)
Other brands

7.0
5.4
4.3

Lighting Global
associated
companies
Lighting Global
quality verified

2.7
0.9
H1

1.5

H2

2011

1.9

H1

H2

2012

H1

H2

2013

H1

H2

2014

Note: Data for Lighting Global associates and other brands represents BNEF estimates based on interviews and other
reported figures.
26 October 2015

H1
2015
Source: Lighting Global, Bloomberg New
Energy Finance
16

LANTERN COMPANY REACTIONS TO MARKET

SEGMENTATION
High
value
products

Add high value

products to offering

Target other
consumer segments

Boost high quality, high

service reputation
Consumer financing
partnerships
Target retail instead
of bulk sales
Low value
products

Target new
frontier markets
Urban distribution

Joining the
cost race

Manufacturing

Distribution
17

PROPORTION OF SELECTED MODULE MAKERS

REVENUE DERIVED FROM DOWNSTREAM
OPERATIONS, 2008-2014
80%

Solar panel manufacturers

increased project
development amid panel
commoditisation

70%
60%

First Solar

Canadian Solar

50%
40%
30%

Solar module price

starts to crash

20%
10%
Trina
Jinko

0%
2008

2009

2010

2011

2012

Note: Module makers selected as those with continuous segment reporting over the period. Downstream defined as
project development, installation, systems, or O&M as opposed to direct sale of solar cells and modules.
26 October 2015

2013

2014

Source: Bloomberg New Energy Finance

18

TRACKED INVESTMENTS IN OFF-GRID SOLAR BY

RECIPIENT TYPE (USD M CUMULATIVE)

200
180
160
140
120
100
80
60
40
20
0

Pay-as-you-go companies raised

almost three times as much
investment as cash sales companies
in half the time

PAYG

Cash sales
Investment
funds

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010

2011

2012

2013

2014

Note: shown data excludes USD 40m of investments with undisclosed date and $27m of aggregate data for which the
recipient type could not be determined.
26 October 2015

2015

Source: Bloomberg New Energy Finance

19

THE SHIFT TO PAYG CHANGES THE DYNAMICS

BETWEEN THE CUSTOMER AND THE PROVIDER

Financing
Technology risk
Data

Service guarantee
Higher value
services
Upsell opportunity
Stronger relationships between customer and provider
Note: The list of companies represents a sample and does not claim to be comprehensive.
26 October 2015

Source: Bloomberg New Energy Finance

20

OFF-GRID SOLAR ADOPTION, KENYA

Households (million, cumulative)

6
New adopters

Radio (US historical,

population adjusted)

4
3

Historical estimated
pico-PV adopters

Forecast cumulative
adopters

0
2009

2011

2013

2015

2017

2019

Source: Bloomberg New Energy Finance,

Lighting Global; Lilien, Rangaswamy and Van
den Bulte, 1999
26 October 2015

21

CASH SALES AND PAYG SALES FORECAST

FORECAST ANNUAL SALES
(M UNITS)

FORECAST USERS
(M HOUSEHOLDS)

120

100

Pay-as-yougo

80

Asia >10W
cash sale

60

Africa >10W
cash sale

40

Asia Pico-PV
cash sale

20

Africa PicoPV cash sale

0
2015 2016 2017 2018 2019 2020

2015 2016 2017 2018 2019 2020

Note: Sales through third-parties with consumer finance offerings are captured in
cash sales. Sales projections assume product lifetime of three years and an
increasing share of households to purchase a second device after one year.
26 October 2015

Source: Bloomberg New Energy Finance

22

POTENTIAL BOTTLENECKS AND ACCELERATORS

Bottlenecks

PAYG

Entrepreneurial and operational

capacity
Access to debt finance
Grid extension and microgrids

Cash
sales

Working capital and distribution

Market spoilage
Cannibalisation by PAYG services,
grid extension or microgrids

Accelerators

Entry of large distribution partners

Growth of DC appliance universe
Proven investor returns

Interventions to catalyse new markets

VAT, customs and kerosene subsidy
reductions
Growth of DC appliance universe

Source: Bloomberg New Energy

26 October 2015

23

SCENARIOS FOR THE OFF-GRID SOLAR MARKET

UBIQUITOUS PRODUCT
MARKET
Low product differentiation
Weak customer
relationships

Little brand identification

High volume, low margins
Risk of low quality
products

PREMIUM BRAND
MARKET
Brand identification with
manufacturer
Few dominant players
Product rather than
service focus

RELATIONSHIP MARKET
Strong consumer
relationships around
multiple products +
services
Brand identification with
distributor

Source: Bloomberg New Energy Finance

26 October 2015

24

THREE PATHWAYS TO SUCCESS

UBIQUITOUS PRODUCT
MARKET

PREMIUM BRAND
MARKET

RELATIONSHIP MARKET

High value, premium branding/products

Modular products or bundled offerings
Counterfeit enforcement
Minimum quality and service standards

Source: Bloomberg New Energy Finance

26 October 2015

25

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