The Off-grid Appliance Market

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Introduction

Around 1.2 billion people worldwide lack access to electricity and another 1 billion people have an unreliable grid connection (sometimes receiving as little as 2 hours of electricity per day).   In 2014, 27 billion USD were spent in Africa and Asia on lighting and mobile phone charging with kerosene, candles, battery torches or other fossil-fuel powered technologies.  All of these technologies are outdated, costly and energy inefficient as well as causing negative health and environmental impacts.

With growing consumer awareness, falling prices and better access to finance, off-grid appliances powered by clean energy have a huge potential to grow and meet the energy demand of the off-grid population. According to a report from IRENA (2015) some 20 million households have access to electricity through solar home systems, 5 million households through renewables-based mini-grids and 0.8 million households through small wind turbines. 

These numbers are likely to increase. The sum spent on off-grid appliances is expected to rise from around 500 million USD today to 4.7 billion USD in 2020.  Currently the most popular off-grid products are small appliances such as solar lanterns and solar lights. However, there is a growing market for other, significantly more energy intensive, appliances such as TVs, refrigerators, fans and solar pumps. According to GOOGLA, 47 million households in Africa and Asia that are not connected to electricity enjoy an annual income of 3650 – 18250 USD. These households are capable of affording not only simply solar lanterns, but also other appliances such as Solar Home System (SHS). 

Access to energy not only improves the quality of life, but also aids in conducting various income generating activities. Therefore, there is a huge potential for manufactures to produce off-grid appliances based on clean energy, not only for daily use, but also for income generating purposes. 

Off-grid Appliances

Traditionally electrical appliances run off Alternative Current (AC), since they are designed to be connected to the grid. However, with the emergence of solar powered isolated grids and stand-alone systems, Direct Current (DC) appliances could become the better alternative. A solar system typically generates DC current which can easily be stored in batteries. Therefore, having appliances which run on DC system reduces the need to convert AC to DC, which in turn reduces costs as well as electricity losses. 

For more information on the differences between AC and DC, as well as further details regarding grid connections, have a look at the articles ‘Technical Aspects of Grid Interconnection’ and ‘DC Mini-grids’.

PicoPV Products

Due to falling costs and growing consumer awareness the PicoPV market is growing rapidly and according to GOOGLA, 44 million PicoPV products were already sold as of mid-2015. Solar lanterns account for 97 percent of reported sales, but companies are also experiencing an increasing interest in PicoPV systems with multiple lights. These are now becoming more accessible to consumers as a result of financing concepts such as PAYG.

Market Trend

There is a growing recent market for PicoPV systems. The number of off-grid solar manufactures has increased by 7 folds in the past 5 years. ‘Many of the early start-up companies are based in the USA and Europe, but large Asian electronics manufactures also play an important role in the market. 

Televisions (TVs)

TVs are the most desired appliances after lightning.TVs improve the quality of life by providing access to information as well as entertainment. In some communities, they are also viewed as a status symbol. In many rural areas there is an increasing demand for low cost TVs with large screens. Many consumers may also trade their savings for larger screen sizes. In terms of technological advancements, there have been dramatic improvement in efficiency and cost.

Market Trend

The off-grid TV market has the potential to grow at a rate of 25% annually and, according to estimates, the annually spending on off grid Televisions could reach up to 3.1 billion USD in 2020.  Recently, M-Kopa Solar  has announced its first solar-powered digital flat-screen TV in Keny. The solar powered TV will be available on monthly payment scheme (pay-as-you-go scheme) such that after two years, the consumers will be able to own it. Similarly, another company called Cello Electrionices in Kenya, has introduced a 22" LED television, completely powered by solar energy. This TV can also charge mobile phone devices, as well as power lights and other essential devices, via a USB connection. The total cost of the TV will be US$300 and will be offered via pay as you go model.

The energy efficiency of the off-grid TVs is increasing.The average Energy Efficiency Index (EEI) of  2016–17 Global LEAP Award-winning off-grid TVs is 19.5 in2 /W, which is more than double of that from last year. Also the market is dominated by 15" to 24" TVs. Manufacturers are also starting to offer larger TVs. Currently a 32" off-grid TV consumes only 14 W-less thatn most market baseline TVs with 15 to 24" screens.The avearge cost per screen is also decreasing from 1.57 USD/in² in 2015 to 1.06 USD/in²  in 2017. For Global LEAP Products, that is even lower at 0.65 USD/in².

Refrigerators

Refrigerators increase the quality of life in off-grid households by preserving the nutritional value of food and also by contributing to income-generation activities. Another crucial application of refrigerators is the storage of vaccines. The off-grid market for refrigerators is nascent and there is low penetration due to their high upfront cost, lack of consumer financing, high electricity consumption and the resultant high lifetime running cost. In Nigeria, the market penentration is about 40%, below 30% in India, just 6% in Bangladesh and 1% in Kenya. 

Refrigerators have a large current surge every time they are switched on. This current surge often requires more than twice the energy that is needed to run the refrigerator at standard conditions. An average refrigerator requires 0.74 kWH per day to operate at an ambinent temperature of 32 C. To supply this power, one would need a 200Wp solar panel adn a 160 Ah Battery. Most of the SHS cannot supply this need as most of them are within a size range of 50-100 Wp. For a 100Wp to support a refrigerator, they have to become efficient and consume about 0.4 kWh per day from 0.74 kWh per day.

Market Trend

Current market spending on refrigeratos by off grid and weak grid households is around 75 million USD. Off-grid DC refrigerators tend to be significantly more expensive than mainstream AC ones. Therefore, until the off-grid refrigerators are cost effective and energy efficient, the market penetration will be low. The price of the refrigerators range from 300 USD on the low-end to roughly 2200 USD on the high end - most rural consumers cannot affor this.

Some of the off grid refrigerator supplier are Sundazer, Phocos, Barefoot Power and Samsung India.

 

Read these documents for more information on refrigerators and freezers:

• Test Procedures, Measurements and Standards for Refrigerators and Freezers
• What Users Can Save with Energy-efficient Refrigerators and Freezers
• The Overall Worldwide Saving Potential from Domestic Refrigerators and Freezers

Fans

Fans are popular in hot and humid climates. In comparison to AC fans, DC fans have 50% higher upfront cost, but their overall lifetime cost of ownership is about 70 % lower. The World Health Organization (WHO) predicted that nearly 100,000 deaths could be caused by heat waves each year by 2030.

Market Trend

The fan market is flooded with cheap generic products (no-names, copycats and counterfeits). The consumers are fairly price sensitive and tend to buy the low price products. This discourages large producers from investing into new, energy efficient, technologies for off-grid markets. Fans might have low upfront wattage requirements, but they are usually used for a longer time which increases their energy consumption. Therefore, the manufacturers of fans should produce more energy-efficient fans while also remaining cost effective and not decreasing the performance.The fans are also not marked with performance indicator, making it difficult for consumers and distributors to include energy efficiency into their purchasing decisions.

Off-grid Appliances for Productive Use

The term ‘off-grid appliances for productive use’ refers to appliances used in economic activities like agriculture or commercial and industrial companies, for socio-economic development. 

 Agriculture

Agriculture is the main source of income in many developing countries and energy is required along the value chain. To read in detail about the role of energy efficient appliances along the value chain, click here.

Examples of some off-grid appliances in agriculture are:

• SunChilli:Solar Coolers
• Milk Chillers
• PV pumping system

For more information about off-grid appliances in agriculture, please see: Photovoltaics for Productive Use and the PoweringAg portal on energypedia.

Off-Grid Appliance Value Chain

The off-grid appliance value chain has the following components: manufacturing and assembly, transport and last-mile distribution and after-sales support.

The major players in off-grid appliances manufacturing are generic companies in Asia (mostly in China), niche companies in western markets, and some multinationals with new off-grid ventures. Manufacturers may also partner with regional companies to assemble parts in-country since often there are lower import duties on individual parts than on the complete system.

For the off-grid market, there are four major distribution channels: (i) institutional partners; (ii) integrated distribution; (iii) traditional dealer–distributor networks; and (iv) franchising. Among these channels, institutional partnerships are the most popular as they unlock extensive rural networks and community-level understanding of different terrains. However, as the market grows, manufactures might be able to tap into traditional distributor-retailer markets. 

Challenges

Major challenges for the off-grid appliances market:  

High upfront costs: The target customers of off grip appliances live in rural areas and might not be able to afford high upfront costs. Innovative financial schemes such as PAYG would help to penetrate the market. However, there is also a need for other institutions like banks and microfinance to provide credits to the rural customers.
Lack of consumer awareness: Customers may not be aware of the potential benefits gained through off-grid appliances. Manufactures could expand their consumer base by educating potential customers about the usefulness of off-grid appliances.
Availability of cheap generic products: A large availability of cheap generic products spoils the market and breaks the trust of the customers. Therefore, strict rules should be put in place to prevent cheap quality products from entering the market. Similarly, policies such as subsidies on kerosene (in India), free distribution of SHS (in Indonesia) distort the market and awareness should be raised to reform these policies.
Lack of Distribution Network: Most of the rural off-grid customer base does not have a distribution network in place. Therefore, the off-grid sector is often required to invest in distribution networks or partner with already available networks. Last mile distribution is one of the most challenging aspects of the off-grid appliances value chain.

Further Information

• LED Lights in Off-grid Applications
• Quality of PicoPV Systems
• Off-grid Lighting Transition from Kerosene to LED
• solar portal on energypedia