Small logo Subscribe to leading news on impact investing. Learn More
The Brief Originals Dealflow Signals The Impact Alpha Impact Voices Podcasts Agents of Impact Open
What's Next Capital on the Frontier Measure Better Investing in Racial Equity Beyond Trade-offs Impact en las Americas New Revivalists
Local and Inclusive Climate Finance Catalytic Capital Frontier Finance Best Practices Geographies
Slack Agent of Impact Calls Events Contribute
The Archive ImpactSpace The Accelerator Selection Tool Network Map
About Us FAQ Calendar Pricing and Payment Policy Privacy Policy Terms of Service Agreement Contact Us
Locavesting Entrepreneurship Gender Smart Return on Inclusion Good Jobs Creative economy Opportunity Zones Investing in place Housing New Schooled Well Being People on the Move Faith and investing Inclusive Fintech
Clean Energy Farmer Finance Soil Wealth Conservation Finance Financing Fish
Innovative Finance
Personal Finance Impact Management
Africa Asia Europe Latin America Middle East Oceania/Australia China Canada India United Kingdom United States
Subscribe
Features
Series
Themes
Community
Data
Subscribe Log In
More

Off-grid energy improves lives, but not always for the most vulnerable customers



ImpactAlpha, Feb. 18 – The impact measurement firm 60 Decibels interviewed 35,000 off-grid energy customers of 49 companies in 17 countries to determine “Why off-grid matters.” The report paints one of the most comprehensive pictures to date of the on-the-ground impact in developing markets of solar lanterns, solar home systems, mini-grids, solar-powered appliances and clean cookstoves.

Globally, 860 million people lack access to electricity and 2.6 billion to clean cooking facilities. Those that gain access via off-grid energy products report clear benefits. Eighty-eight percent of the customers interviewed said that energy access improved the quality of their lives; about the same number feel safer in their homes. Access to modern lighting reduces the use of dirty kerosene, and boosts the amount of time that children study by close to 20 minutes each day.

The report, sponsored by CDC Group, Acumen, Efficiency for Access Coalition, and Shell New Energies, was launched at the Global Off-Grid Solar Forum & Expo in Nairobi this week. 

Energy ladder. Simple, low-cost solar lanterns are often a family’s first off-grid energy product, and offer “the most bang-for-your-buck,” write the authors. Clean cookstoves do the best at reaching women, yet lag in penetrating low-income households.

Mini-grids are effective at providing energy to low-income communities, but their growth has been held back by high capital costs and slow roll-outs. Blended or patient capital, as well as subsidies, could speed adoption. 

African Development Bank takes on ‘energy poverty’ with $15 billion pledge

Upmarket moves. As off-grid energy providers grow, they appear to focus less on the poor. Among the energy customers surveyed, 37% live on less than $3.20 a day, compared to 60% for the population as a whole in these markets.

“We think responsible investors, and governments looking to utilise subsidy, should be attentive to this trend,” write the authors. Their recommendations include  accessible financing options, lower prices, smarter subsidy, and wider distribution.

Powering livelihoods. Only about one-fifth of customers use their new energy to generate income by, for example, powering bars, restaurants, shops and kiosks. Two-thirds of farmers using solar water pumps increased their yields, and 10% increased their income. 

Investors called to account for fintech lending practices as debt-traps emerge

Financial burdens. More than two-thirds of energy customers interviewed are accessing credit for the first time, thanks to financing mechanisms such as pay-as-you-go. Just 4% of families said payments were a heavy burden, yet more than a quarter felt they were “somewhat” a burden. Among solar refrigerator customers, 65% took out another loan to make payments on the fridge.

A third of customers also report challenges using their product, suggesting improvements in product quality and support are needed.

You might also like...