IMPACT ISSUE 12 | MARCH 2018 Image Source: ©Yang Aijun| World Bank FROM LIGHTING AFRICA TO LIGHTING GLOBAL: CREATING OFF-GRID SOLAR MARKETS TO LIGHT UP THE WORLD The off-grid solar sector has taken a leap in the past decade to help developing countries reach their energy access goals. Fueled by new technologies and business models, the sector has provided improved electricity to approximately 360 million people to date. The Energy Sector Management Assistance Program (ESMAP) has been a key part of this revolution. It provided crucial technical and financial support to help leverage millions of dollars in World Bank financing, strengthen policies, and engage the private sector to accelerate off-grid electrification. TIMELINE OF ESMAP SUPPORT Ann Muthoni, a farmer in Kenya, remembers when she had to use kerosene LAUNCH (2009) lamps to light up her house and how it affected her entire family.  Design conceptional “We used to spend a lot of money on kerosene. In the evening, when the framework for implementation children were studying, the kerosene emitted fumes that would fill the house. The following morning when the children woke up, they were  Create quality assurance coughing.” standards Like Ms. Muthoni, hundreds of millions of people around the world still use GROWTH (2010) polluting and expensive lighting sources, such as kerosene lamps or candles, that limit educational and economic opportunities and negatively impact health  Conduct consumer surveys in and quality of life. 10,000+ off-grid households Ms. Muthoni says that a lot has changed since she purchased a solar-  Use consumer data to powered LED lamp, a lighting alternative that makes everyday activities safer and more practical. improve product design and other aspects of the market Image Source: ©Mobisol | Ashden Awards  Work with governments to integrate off-grid lighting into rural electrification programs and remove regulatory and policy bottlenecks EXPANSION (2012–Present)  Help Lighting Africa expand its reach from 2 pilot countries to 29 countries and support Lighting Global “In the evening, the children use the lamp for stud- THE EARLY YEARS: BUILDING ying,” she said. “We don’t get any more infections. The lamp has been helpful to us.” OFF-GRID SOLAR MARKETS IN Modern, high-quality off-grid lighting and energy prod- AFRICA ucts can transform lives. Over the past decade, a In 2009, ESMAP partnered with the International concerted global push has created thriving markets for Finance Corporation (IFC) to launch Lighting Africa—a these products, demonstrating that off-grid solutions pioneering initiative to develop a commercial market for can complement sustained grid electrification to accel- the manufacture and sale of quality solar lanterns to erate the rate of bringing electricity to the roughly 1.1 light up the lives of 600 million people without electricity billion people who lack this service. across Sub-Saharan Africa. Today, off-grid solar products are reaching an estimat- While Africans were spending nearly US$10.5 billion on ed 73 million households, or more than 360 million kerosene lighting products every year, companies people, globally. Children can study at night and busi- selling and manufacturing off-grid solar products were nesses can operate for more hours each day, thanks to unable to break into the vast, untapped off-grid solar these products. Equally impressive is how the market market. Manufacturers were struggling to find business has evolved and expanded. New technologies and partners. Consumers were not aware of new technolo- innovative products and companies are being launched gies and low-quality products were pervasive, destroy- every year. Many governments across the world are ing confidence in the entire market. Financial institu- strengthening their policy environments to facilitate this tions, unfamiliar with the industry, were unable or transformation. unwilling to exploit the market’s growth potential. Starting in Africa and later expanding to other regions, ESMAP was a catalyst for changing this landscape. the World Bank’s Energy Sector Management Assistance Program has provided technical and finan- The first step was to identify the key barriers that cial support to fuel this revolution. It created the right blocked the scale-up of off-grid products and to outline policy environment and strengthened product quality actions to address them. ESMAP brought together standards, which helped to leverage millions of dollars manufacturers, distributors, consumers, financial in World Bank investments and engage the institutions, development partners, and governments to private sector to accelerate off-grid electrification. devise joint solutions. For example, early consultations with the private sector identified the lack of quality standards to be a major impediment for developing and marketing quality products. Consequently, ESMAP put together a solid quality Benin Liberia assurance mechanism, the standards of which grew into globally accepted benchmarks for manufacturers Burkina Faso Madagascar and consumers, now recognized as Lighting Global Cabo Verde Malawi standards. These standards increased trust among Cameroon Mali sellers and consumers and built confidence in investing in the market. With guaranteed quality, microfinance Central African Mauritania Republic institutions became more willing to provide financing Niger and governments became more open to support the Chad off-grid sector. Nigeria Cote d’Ivoire Rwanda Consumers benefited the most. To build consumer Democratic knowledge about available products, ESMAP helped Republic of Congo Senegal Sierra Leone design and implement public awareness campaigns. Ethiopia Through media outreach, product demonstrations, and The Gambia Somalia entertainment at road shows consumers learned about Ghana Tanzania the benefits of solar lighting products—better illumina- Togo tion, cost savings, reduced indoor air pollution, and Guinea more productivity in homes, schools, and businesses. Guinea-Bissau Uganda They also learned how to distinguish substandard from Kenya Zambia high-quality devices. 2 IMPACT | ISSUE 12 Image Source: ©Frank van Vleuten via flickr (CC BY 2.0) Finally, ESMAP focused on the development of distri- assurance, access to finance and business support bution channels, access to financing for product import- services, and consumer education. ers and distributors, as well as in-depth market intelli- gence on product design and customer preferences. ESMAP supports Lighting Global by engaging govern- ments through World Bank lending projects and policy By 2010, the market was already seeing an upward dialogue. trend and by 2012 its growth accelerated significantly, fueled by increased confidence in product reliability and As of June 2017, ESMAP helped to leverage more than many private players entering the industry. US$120 million in World Bank funding and more than US$85 million from other financiers to invest in the Since the beginning of Lighting Africa, 14.8 million off-grid solar market in several countries. Most of the quality-verified solar lighting products have been sold, World Bank funding is now used to support financing enabling 23.3 million people in Africa to meet their facilities to allow off-grid energy companies to acceler- basic electricity needs. The goal is to reach 250 million ate efforts and reach out to poorer and more remote more people by 2030 by scaling up efforts in current communities that the commercial market alone is countries and expanding to new ones across the conti- unable to reach. ESMAP plays a crucial role in helping nent. governments design these facilities. Now, when darkness falls on the bustling market in Mai Mahiu, Kenya, instead of packing up their goods and heading for home, most vendors switch on their locally purchased LED lights and continue selling well into the night. “I have been able to add two more hours of trading Afghanistan each day thanks to the small LED lighting system Bangladesh that costs just US$20,” said Eunice Wanjiru, a fruit and vegetable seller at the market. Haiti India GOING GLOBAL Myanmar The unprecedented success of Lighting Africa gave Pakistan rise to the World Bank Group’s Lighting Global initia- Papua New Guinea tive to fight energy poverty in the Americas, South Asia, Vanuatu East Asia, and the Pacific. In coordination with the Global Off-Grid Lighting Association (GOGLA), Lighting Global supports acceleration of off-grid elec- trification, working with both the private sector and governments, supporting market intelligence, quality IMPACT | ISSUE 12 3 One such example is Lighting Kenya. While the off Lighting Global has benefited more than 131 million grid market enjoyed a diversity of companies and people with verified solar lighting products. The products, few of these products were reaching the program has helped 39.5 million people meet basic poorer, remote, and sparsely populated areas of the lighting needs in 17 countries. In addition, the World country. Working through the World Bank’s Kenya Off- Bank is actively engaged in the adoption of the Grid Solar Access Project, ESMAP worked with the Lighting Global toolkit and in lending operations with private sector to design a facility that makes funds government partners in 7 additional countries. available to local off-grid companies to help them expand reach and to offer customer-financing options, Distributed solar products are achieving unprecedented such as pay-as-you-go purchasing models. The results- development impact as a commercial, affordable based financing made available by the facility to com- means of delivering modern energy services to achieve pensate for the higher costs of serving these remote economic development at scale. The number of lives households has addressed a critical gap in the market. impacted is staggering. Continuous support from ESMAP has been critical to grow the off-grid solar market in Africa and globally. Image Source: ©Leh | via flickr CC by TEDx ESMAP MISSION The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance program administered by The World Bank. It provides analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Denmark, the European Commission, Finland, France, Germany, Iceland, Italy, Japan, Lithuania, Luxemburg, the Netherlands, Norway, the Rockefeller Foundation, Sweden, Switzerland, and the United Kingdom, as well as The World Bank. 1818 H Street, NW Washington DC 20433 www.esmap.org esmap@worldbank.org