Southern Africa has the solar publicity, accessible land space and declining costs of parts that imply the realm is nicely positioned to sustainably tackle the area’s energy challenges via photo voltaic.
However regardless of this potential, the photo voltaic business within the area stays largely untapped. That is very true within the residential market, which is usually neglected based mostly on the view that photo voltaic is simply too costly, much less engaging for customers and delivers low returns.
Progressive enterprise fashions can tackle these challenges and speed up adoption to develop the native photo voltaic business.
There are 17.1-million households in South Africa and 84.7% of these receive their power supply from Eskom. As well as, 1.5-million households are by no means related to the grid. For these which can be related to the grid, a sizeable quantity are contemplating investing in different power provide to enhance what Eskom provides, as an example throughout occasions of load shedding or load discount.
The ever-rising electrical energy tariffs — 100% since 2009 — have additionally created a section of households which can be in search of aid by going fully off-grid.
A chance exists to serve the residential market, which may be additional segmented into the city off-grid, hybrid, and rural off-grid submarkets. Every of those submarkets has distinctive wants and sensitivities.
The city off-grid submarket
Relying on the scale of the home, this sub-market’s electrical energy is used to energy home equipment that embody geysers, stoves, microwaves, air-conditioning techniques, irons, leisure techniques and swimming pool heaters. For this submarket, the principle drivers for contemplating a photo voltaic system set up are lowering or eradicating the month-to-month power invoice and guaranteeing management over provide always. With many individuals now working from residence as a result of Covid-19 lockdown and social distancing protocols, a break in energy provide means restricted productiveness when laptops and web connections go down.
A bundled strategy can higher serve this end-user market.
First, suppliers ought to perceive the high-energy-consuming home equipment within the family. An built-in resolution must be developed to focus on the discount of grid power for these home equipment. Photo voltaic techniques may be mixed with complementary merchandise, similar to fuel merchandise, to offer an built-in end-to-end resolution.
This bundling strategy can significantly scale back the purchasers’ power invoice however comes with the setback of a excessive capital and switching value.
One option to overcome this problem is thru partnerships with monetary service suppliers, which may present financing that may be tied to a mortgage mortgage for the house the place the system can be put in. Upfront prices may be optimised and extra inexpensive month-to-month instalments unfold over a long term.
The city hybrid submarket
This submarket is made up of small homes, townhouses and/or residences which have fewer home equipment than the city off-grid class. These prospects want to scale back their utility-based electrical energy spend and guarantee power provide continuity throughout load shedding. They don’t seem to be ready to make the total funding required to go off-grid and need to use photo voltaic power as a back-up power supply.
Serving this market requires a focused strategy that focuses on important home equipment that have to proceed working in periods of grid-supply disruption. These home equipment embody lights, televisions, satellite tv for pc dish receivers, web routers and safety techniques. The best resolution ought to embody panels, an inverter, and batteries. The photo voltaic panels generate power through the day, which is used for a part of the load through the day. Batteries are charged to retailer extra power that can be utilized to hold chosen home equipment within the occasion of grid-supply outage at evening.
This submarket sometimes has a number of drains on their wallets, together with college charges and car mortgage repayments. It’s crucial that financing methods tackle these realities. Suppliers ought to think about deploying a hire-purchase strategy, just like the automotive business. Prospects might pay a deposit for the set up of the answer and make month-to-month funds over a stipulated interval. Funds are break up over an inexpensive (for the shopper) but viable (for the provider) payback interval to the mutual good thing about each stakeholders. It will allow extra buy-in as most prospects merely can’t afford to make an upfront money cost for the system.
The agricultural off-grid submarket
Rural off-grid customers sometimes keep in distant areas with no entry to electrical energy resulting from transmission and distribution constraints. For this submarket, power is for lighting, powering leisure home equipment similar to televisions and radios, in addition to charging cellphones.
This section is finest served via a prepayment mannequin. On this strategy, an power service supplier both sells or leases modular photo voltaic photovoltaic techniques in change for normal funds based mostly on utilization.
When bought models run out, the system robotically disconnects the electrical energy provide from the photo voltaic system till extra models are purchased.
Versatile cost options are crucial for adoption and success right here. For instance, cost must be doable through USSD or smartphone apps. In keeping with the Worldwide Renewable Vitality Company (IRENA), 730 000 units of such a prepayment mannequin had been bought in East Africa in 2016 and 8-million folks thus gained entry to electrical energy between 2015 and 2020.
South Africa can customise related modern fashions and speed up the democratisation of electrical energy entry.
The South African photo voltaic market provides important alternative for business members. Within the residential section, suppliers ought to think about coming into into partnerships with financiers and leverage these relationships to supply off-grid, hybrid and pay as you go options that may improve power entry for the nation and the remainder of the Southern African area. Enterprise mannequin innovation will play a crucial position in addressing the wants of every of those submarkets.