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Africa Shapes the Off-Grid Energy Global Market

December 2019
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The lack of access to electricity in Africa sparked off-grid energy development across the globe. As a continent with countries that lack proper infrastructure, Africa became a leader in solar energy developments that influence the rest of the world.

Renewable energy solutions paved the road for communities in need to access electricity at a much lower cost than coal and gas.

Adaptation to renewable energy in private and commercial sectors presents economic development and investment opportunities.

As a leader in solar electricity distribution in Nigeria, Lumos is responsible for improving the quality of life of the communities suffering from poor and unreliable connection to the grid.

"Alistair

Alistair Gordon, CEO of Lumos, shares the importance of this development: “Energy is very aspirational, and people move up what you might call the energy ladder. They get a new job, they want a bigger TV, they need more power. So you have to have the flexibility in your solution to deal with that — people are changing.”

The solar energy business model is spreading from Africa to other parts of the world. Profitable, data-based business models operating in Africa, received international recognition according to the latest report from the International Energy Agency.

Read more about Solar Energy and Renewable Electricity in Africa

Escalating Demand for Off-Grid Energy

Based on IEA’s report, current energy investment plans will not be able to provide electricity to Africa’s rapidly growing population.

Out of the 1.3 billion population, 600 million lack access to electricity and 900 million lack access to clean cooking facilities.

Africa’s population is projected to reach 2 billion prior to 2,040. It is crucial to strengthen economic growth and electric infrastructure development for the fastest-growing population.

Since current plans can’t provide electricity to nearly half of Africa’s population, modern renewable electricity solutions could be the ideal solution.

Not only to communities in Africa but to 840 million people worldwide that live without access to safe and reliable electricity sources.

Report findings strengthen the need for clean energy technologies, such as solar PV. Natural gas sources are much more limited than sunshine.

Alistair Gordon the CEO of Lumos explains why governments should support solar energy development. “Investment in solar and government backing is crucial to driving economic growth and sustainable development,” said Gordon.

“This comprehensive report from the IEA demonstrates the huge opportunity Africa has to leapfrog the fossil fuel industry and provide a better quality of life for everyone through clean, affordable and reliable energy. Nevertheless, there are still 600 million people living with no access to electricity in sub-Saharan Africa, so there’s a lot of work still to be done,” Gordon added.

Lumos sets an example to government bodies and companies across the globe to support the growing industry.

Government and stakeholder partnerships contribute to the common, highly demanded goal of providing clean energy solutions.

Investment Opportunities

The global off-grid energy market identified commercial investment opportunities, technology developments and challenges.

Back in October, The Off-Grid Energy Access Forum that was held in London, presented up-to-date business data, financial information and risks of the solar power industry.

In addition, certain business models that evolved in Africa may or may not work in other developing countries around the globe.

Mobile Market

The mobile pay-as-you-go (PAYG) business model boosted solar energy usage in African countries.

Availability of networks applied to the development and convinced stakeholders to invest in solar solutions.

However, in Latin America, PAYG is not available in rural areas.

Alternative electricity payments are collected in local shops.

For example, in Guatemala, salesmen deliver the hardware directly to customers, who paid for the installments at selected local shops.

The PAYG model attracts investors from Europe and the United States, but the local shops’ distribution model is difficult to measure financially.

Local governments explore new ways to implement PAYG business models in Latin America.

There’s a challenge to predict if investment in the expansion of electricity will eventually pay off.

Alistair Gordon CEO Lumos Global

Big Data Decision Making

Big data is necessary for making business decisions for the off-the-grid solar energy industry.

Consumers’ data allows companies to provide better service and development. In addition, banks, governments, insurance companies, and venture companies, all rely on data access for investment and partnership decisions.

In countries, these companies are dedicated to helping, there are a lack of data protection regulations and a breach risk.

Without protection or a collective data system, it’s nearly impossible to expand solar systems.

Data research helps companies to locate areas with reliable customers, analyzing potential sites, and evaluating future areas for development.

On a global scale, solar energy companies request that governments enhance partnerships with mobile providers to access the necessary data for success.

A Rise in Global Off-Grid Energy Demand

Following Africa, the rise in off grid energy demand drives development and investment in rural areas of Asia and Latin America as well.

Africa contributed greatly to this market supporting population growth, quality of life and local economies.

At Lumos, Gordon explains that the “focusing on unit profitability and we believe that corporate profitability will follow.”

Recognizing the contribution of companies such as Lumos, government bodies and stakeholders supports business development in Africa and rooting the message on other continents.

Investors, companies and public organizations get involved with partnerships on a local and global scale to provide electricity for communities living off the grid.