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Off-Grid Solar Product Sales Dip by 48% YoY In H2, 2020

 

The Global Off-Grid Lighting Association (GOGLA) has published its semi-annual sales and impact report (from July to December 2020) of the off-grid solar market. To develop this report, partner companies and their affiliate companies’ data were included. 

According to the report, between July to December 2020, sale of the off-grid products was 405,000 units in India. Sales have been declining since 2018, which appears to have been stimulated by the Covid-19.

After touching the lowest point, sales got increased slightly by 3% compared to the first half (H1) of 2020. But the overall decline is still 48%.

Due to Covid-19, the Indian Economy declined by 9.6% in 2020. The Government of India announced many incentive packages. These plans include credit guarantees for small and medium enterprises and $200 million business loans for rural companies through the rural development fund.

The total worth of these plans is around $15 billion (15% of GDP).

During the beginning of the pandemic, the Reserve Bank of India allowed a three-month loan prohibition for bank borrowers but not for the Microfinance institutions (MFIs) which is the main distribution channel for off-grid solar products, and because of which the Microfinance Institutes were more affected by the crisis.

In the second half (H2) of 2018, India emerged as the largest cash market for off-grid solar products with 1.2 million units whose total worth was around $58 Million. While these sales declined by 50% in the first half (H1) of 2020 in comparison to the second half (H2) of 2019. As per another report of the GOGLA, due to the Covid-19 effect sales were also down by 59% in comparison to the first half (H1) of 2019. 

Apart from the Covid-19, the other two influencer factors for declining of sale are the 99.99% electrification rate reached through the grid extension under the ‘Saubhagya‘ initiative in 2019 and the duty on import of solar products to stimulate local manufacturing. 

As per GOGLA’s previous report, the Indian private player-driven market (solar lanterns and solar home systems) is presumed to reach ₹26,178 million by 2023.

In South Asia:

Between July to December 2020, the total sale of off-grid solar products is 479,000 units in South Asia, which was the lowest volume recorded since regional reporting began in 2015. the decreasing pattern continued since the second half (H2) of 2018 and was stimulated by the Covid-19 in 2020. Despite this, for the first-time sales volume remained stable with a drop of 3% as compared to the first half (H1) of 2020. Which is 43% is less in comparison to the second half (H2) of 2019.

Global Level:

In comparison to the first half (H1) of 2020, In the second half (H2) of 2020, the sale of off-grid lighting at the global level grew by 19%. the total value of sold products is 3.6 million.

In comparison to the second half (H2) of 2019, only one-third of solar lighting companies were able to either stabilize or increase their sales. With more than half reporting sales decreases of over 25% and a third reporting sales reductions of more than 50%. Due to Covid sales volumes of off-grid companies has continuously reduced, some companies have almost or equal to zero sale in the second half (H2) of 2020.

Researchers say, all those areas which got support in this crisis time, such as relief funding or government incentives, & Innovations that adapted the industry to the changing market environment, had more robust sales levels. 

Due to the supply shortage, the price of hardware components has increased which further had impacted the off-grid sector. Further, the increased price on freight has added to the price of components to the affiliate companies. Because of this, the affiliate companies have to present the product in the market with the updated increased price.

Despite all these setbacks, the demand for off-grid products has not declined, the demand is there and it is growing.

In the second half (H2) of 2020, the sale of the home lighting system was 6,20,000 units. It’s 10% more than the sale in the first half (H1) of 2020.

One cannot overrule the fact that the off-grid solar solution is the fastest and most affordable way to electrify households.

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