Time is ripe for ‘off-grid’ solar.

Off-grid solar PV is a rapidly growing market, particularly in emerging economies. According to the International Energy Agency (IEA), more than 1.3 billion people globally are without access to electricity. More than 95% of these people are either in sub-Saharan Africa or developing Asian countries. ¹ Even where a grid power connection is available, supply is often limited — or there are frequent power outages. Access to electricity could lead to life-saving improvements, be it in the areas of health, communications, or education. But as incomes in emerging markets rise, so does the number of consumers who can afford electrical goods. They are rightly demanding better services and opportunities for economic and social development.

However, the use of off-grid solar PV is not restricted to countries in the developing world alone. Standalone solar systems are as well applied in developed countries, either as add-on or back up-systems, or as full self-supply solutions. Areas of application include, for example, barns and sheds in the agricultural sector or energy supply for holiday homes in more remote areas. Advantages of off-grid PV systems compared with grid-connected installations are greater flexibility and mobility.

In some cases, off-grid technology provides improved infrastructure and new business opportunities. So far, in emerging economies, many communities and households without access to the grid — or with only limited grid access — have been relying on diesel generators. As the price of diesel increases, off-grid electricity generation is becoming more attractive, even without subsidies or Feed-in Tariffs. The good thing about solar panels is that they don’t have any moving parts that require servicing, and they require no fuel. What’s more, solar PV systems are quiet and clean compared with noisy and polluting diesel generators. They are also much safer than kerosene lamps, which cause health and pollution problems.

Unfortunately, off-grid, rural areas aren’t very enticing for big electricity providers. There is little incentive for them to extend their grid, primarily due to the high cost, poor economics, corruption and red tape. Off-grid solar PV systems can fill the gap – they can provide a secure energy supply where no reliable public electricity grid is in place, making a significant contribution towards electrification in under-developed areas.

Thankfully, the latest generation of off-grid solar systems comes with batteries.²  While this makes them more expensive (batteries can add as much as 40 per cent to an off-grid solar system’s cost  and the batteries will have to be replaced at some point) it also enables them to back up vital energy-dependent areas such as telecommunications, education and health systems and domestic power requirements.

When it comes to such systems, it’s critical that an off-grid solar PV offering be robust, have a high output performance and be user-friendly. The goal is “real plug and play”, so that they can be individually aligned to local conditions and put into service without any need for detailed technical knowledge – an electrician is mainly just needed to ground the unit. 

Off-grid PV financial aid

 Equally important is affordability: access to finance is the main obstacle to the expansion of off-grid solar PV. It may be possible to reduce the cost of off-grid solar systems by increasing the efficiency of electrical appliances — for example, installing LED light bulbs and newer model refrigerators and computers. However, the initial investment might still be a challenge for low-income families or poor communities. 

That’s why off-grid solar systems have attracted the interest of development aid organisations wanting to fund electricity supplies for families and small businesses in rural areas of the developing world. Back in 2008, the World Bank approved two projects in Bangladesh to install 1.3 million solar home systems. And its China Renewable Energy Development project, which closed in mid-2008, installed more than 400,000 solar home systems in north-western China.

Smaller charities and foundations are also helping. The GOEDE Foundation, part of the German GOEDE Group, set up a “Solar Energy for Education” project, which provides solar PV systems to give people in off-grid, rural areas access to modern education technology. It has already shipped 100 PV-systems to the northern Vietnamese region of Quang Ninh, where they enable both children and adults to watch educational TV programmes and use DVDs with educational materials for up to four hours each day. 

Microfinance Institutions, or MFIs, can also play an important role in financing off-grid solar PV, for instance, by offering poor clients loans for energy products, or by assisting local energy companies to expand into new, rural markets and thereby creating business opportunities for energy suppliers and users.

Pay-as-you-go (PAYG) payment options could also be a solution for emerging markets: customers could pay for the services via scratch cards validated through a text message. This enables them to make a low-cost down payment for a solar photovoltaic system and removes the obstacle of asking very low-income communities to pay large upfront costs.

Early indicators suggest the future for off-grid solar holds tremendous potential.  According to a McKinsey study from May 2012, the demand in the off-grid solar segment could reach 15 to 20 GW by 2020. Why so bullish? Some believe on-grid power supply will not be able to meet growing demand, especially in developing countries, where the cost of rolling grid connections into many rural areas can be prohibitive. And in Western countries, increasing energy costs may very well push interest in off-grid PV because it allows for independence from the price settings of the large energy suppliers. Also, the steadily rising cost of fossil fuels means solar battery systems offer greater long-term returns. In short, the market for reliable, inexpensive energy has never been better.

Source: www.iea.org