Charities' early efforts to distribute clean energy technologies in Africa met with little success. Their use of donor funding to heavily subsidise products such as solar lighting kits would generally fulfil a programme's short-term targets, but in the long run the expertise and equipment needed to maintain the systems failed to be adequately developed or provided.
Crucially, no new systems beyond a programme's target would appear in the area. But a new wave of investors and social enterprises has sprung up in the last decade, and they are increasing the availability of products tailored to off-grid domestic energy customers in Africa.
One estimate for the total base of the pyramid energy market in Africa alone is a potential value of US$27 billion; another for the market opportunity for improved energy services in under-served areas of the world is $37 billion.
While increasing numbers of products are being developed for these potential customers, this in itself will not catalyse a market. Effective and sustainable sales channels are also needed, along with associated services such as development of appropriate quality standards. In the case of a lack of early sales of solar products, the absence of both a market infrastructure to make the technology more available and consumer finance to make it more affordable have been two hurdles to overcome.
Addressing the first, there may still be a role for donor-based programmes alongside the new socially oriented businesses. Development organisations have recently recognised the co-benefits of supporting small businesses specifically to achieve new service delivery.
Business Training
Taking this approach is Global Village Energy Partnership (GVEP) International and its five year Developing Energy Enterprises Project (DEEP), operating in Kenya, Uganda and Tanzania. It provides services such as business and technology training plus a loan guarantee scheme to energy entrepreneurs. Each entrepreneur receives intense technology and business training and regular visits from a mentor, whose help includes the setting of realistic production or sales targets and who may refer them for the loan scheme.
For the micro-solar market in Africa, most of the social enterprises involved in developing products have also established country offices to set up distribution networks. The recruitment of solar entrepreneurs who can use existing social networks to help sales is becoming a popular approach. Yet many new entrepreneurs need support in developing the business capabilities to drive their new business forward. This is where a donor-based programme such as DEEP can help. A crucial point is that GVEP as an NGO is providing services that, when withdrawn at the end of the funding period, will hopefully leave enhanced market infrastructure rather than a gap.
SolarAid is an NGO operating in Kenya, Malawi, Tanzania and Zambia that aims to catalyse the micro-solar market in Africa. Its ambitious goal is to eradicate the use of kerosene lamps by 2020. SolarAid has recently shifted its strategy from dependence on grant and donor funding, forming a new social enterprise called SunnyMoney which ultimately intends to be a distribution channel for high quality micro-solar products in Africa that is financially self-sustainable. This would mean not subsidising the products it imports, a move which can cause confusion as consumers may have come to routinely expect subsidised or free products.
