Global Off-grid Solar Power Systems Market – Pay-As-You-Go Model to Drive Growth| Technavio
LONDON — The global off-grid solar power systems market is expected to grow at a CAGR of more than 14% during the period 2018-2022, according to a new market research study by Technavio.
The report categorizes the global off-grid solar power systems market based on its applications in the residential and non-residential sectors. The report also provides an analysis of the growth prospects of the market across various geographic regions such as the Americas, APAC, and EMEA.
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Market driver: high cost of grid expansion
The cost of the main grid extension for rural electrification is considered high, as the investment depends on the distance of the community from the existing main grid, the population density, power quality, demand pattern, and other factors. While it is estimated that grid extension offers the lower cost per kW to the population living beyond semi-urban areas, it remains the least cost option only if it is a highly dense area, and in cases where the area is sparsely populated or spread out over a geographic area, it is expensive. Thus, the high cost of grid extension has led various governments and communities to use stand-alone energy systems for decentralized power to power remote households and communities.
According to a senior analyst at Technavio for power research, “Decentralized off-grid systems are the most cost-effective solutions in terms of system cost for powering sparely dense areas, as a stand-alone system can typically power a single household, generating sufficient electricity to power lights, television, and charge mobile phones. The off-grid solar power system can be scaled according to the growing power needs.”
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Market trend: growing Pay-As-You-Go (PAYG) model
Over the past several years the need to improve energy access has been a crucial agenda across the world, especially in developing countries. The continuous decline in decentralized renewable technology cost, such as solar PV and energy storage, has improved the affordability of off-grid technologies, thus playing an important role in accelerating the energy access.
However, building and sourcing financing for renewable-based mini-grids can be expensive in some countries, which has given rise to a new business model called Pay-As-You-Go (PAYG). The PAYG business model addresses the high upfront costs that discouraged households from acquiring solar systems. Under the PAYG, a customer pays a small fraction as initial payment and follows up with predetermined installments, which are typically made over mobile phones, and if the customer fails to make the payment or is overdue, the system is designed to be disabled.
Market challenge: high initial PV system cost
It is highly necessary to have a battery connected to the renewable systems to have access to a continuous and reliable source of power, as renewable sources such as wind and solar are intermittent in nature. Most commonly paired sources are solar and batteries, as solar is abundantly and freely available clean source of power, wherein solar PV modules charge the battery, and the power is discharged from the battery when the solar module is not generating enough power. However, the procurement, installation and maintenance of solar hybrid systems is relatively expensive when compared with standalone diesel systems.
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