Lighting Africa Catalyzing Markets for Modern Off-Grid Energy. November 2017

Transcription

1 Lighting Africa Catalyzing Markets for Modern Off-Grid Energy November 2017

2 About 1.2 billion people globally, 600 million in Africa live without access to the electricity grid. 2 2

3 The vast majority of the energy poor live in rural areas. They spend about $27b annually on lighting and mobile Phone charging 3 3

4 Energy access: the cost of grid connectivity skyrockets as distances grow and population density drops. Stand-alone systems present a credible solution 4 4

5 Marketing and customer acquisition strategy Our marketing and customer acquisition strategy has been primarily based on direct marketing activations with customers of partner MFIs, where our Brand Ambassadors (engaged by our BTL Agency) visit partner MFI branches and customer forums on designated days to pitch our program and the QV products supported by our program. This direct engagement approach is supported by the distribution of marketing collaterals containing product information, which prospects are given to serve as reminders as well as reference material. PROS 1. This approach ensures that we communicate directly with prospects, thereby, eliminating the risk of message dilution and miscommunication. 2. The use of Brand Ambassadors provides robust LA/IFC representation, lending credibility and creating consumer confidence. CONS 1. The approach is limiting as it restricts our reach to only existing customers of MFIs. 2. The MFIs strict ownership of their customers does not allow us to option of following up prospect to close the sale. 5

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7 Lighting Global, Lighting Africa The World Bank Group s platform to support sustainable growth of the off-grid solar market to rapidly increase energy access to the 1.2 billion people without grid electricity. IFC and the World Bank work with stakeholders to develop the modern off-grid energy market. The lighting programs support market development by working with private companies to lower first-mover risks and mobilize private sector

8 The cost of Solar Home Systems has fallen dramatically, making them a viable alternative to the grid for some. Lights Battery PV Balance of System Appliances SHS with standard appliances SHS with standard appliances SHS with superefficient appliances 2017 projection SHS with super-efficient 60% decline in 5 years $0 $200 $400 $600 $800 $1,000 $1,200 Retail Price by Component ($ US) 8

9 Catalyzing market development framework Lighting Global & country programs operate along the market transformation curve, focusing on specific market support/development activities Market introduction stage Market growth stage Maturity Self sustaining Market 20-25% Inflection point Technology/business model advancement Advisory services Investment MARKET INTELLIGENCE CONSUMER EDUCATION QUALITY ASSURANCE SUSTAINABILITY BUSS DEV SUPPORT WORKING CAPITAL DEBT FINANCING IFC INVESTMENT Addressing regulatory constraints 9

10 LIGHTING AFRICA PROGRAM COMPONENTS Market Intelligence Quality Assurance Consumer Education Business Development/ Access to Finance

11 Products sold globally in H People with improved energy access, cumulatively Products sold in SSA People with improved energy access, currently Cash sales revenue in H SSA cash sales revenue in H Cumulative product sales since July 2010 Tons of GHG emissions avoided

12 Sales Volume and Cash Revenues West Africa (H1 2017)

13 Top 10 Country Markets by Volume of products sold (H1 2017)

14 For the latest Off-Grid Solar Market Trends Report cs/gogla_sales-and-impact-reporth12017_def.pdf

15 Off-grid opportunity: growing menu of technology and business models for ALL Ø Makes off-grid electricity more attractive and available both for the poor and better-off households Ø Overlapping technologies and business models to choose from Ø Possibility to satisfy varied income levels and geographic/demographic conditions Ø Makes it easier to climb the energy ladder Larger grid-quality mini-grids Grid Device sales (mostly lanterns) PAYG Rent to own (lanterns/shs) PAYG fee for service (kits/shs) Village micro-grids Expanding fast Allows customers to afford higher service level Scalable business model Most investment ready 15

16 Enabling BoP consumers to climb the energy access ladder. Scale (~Watts) s 350 s 100 s 1000 s Topology DC DCOnly DC DC some AC AC MostlyAC AC Nearlyall all AC AC Loads Lighting and Phone Charging Lighting and Phone Television Charging and Fans Television and Fans Range of Appliances Range of Appliances Industrial Power Industrial Power SE4ALL Tiers 1 2 to 3 1 to 5 4 to 5 US$ US$ 140-2,500 Highly variable Highly variable Work with a variety of business models and partners PAYGo model is getting strong IFC engaged in the space Attention to OTC still needed 16

17 PARTNERING MANUFACTURERS OF QUALITY-VERIFIED PRODUCTS (NIGERIA)

18 CONSUMER EDUCATION: ATL 30,000,000 people exposed to Pan-Nigeria mass media campaign on Radio, Press and outdoor.

19 Consumer Education: BTL 900+ Activations in 11 States. 1,000,000+ persons directly reached.

20 Retail Channel Development Model Pre-LA Value Chain Post-LA Value Chain Importer/ distributor Consumers Importer/ distributor Wholesaler Retailer Consumers The approach Fulfilment aggregator (or proxy distributor) piece 20

21 Access to finance Getting the sector on the agenda of FIs

22 CONSUMER ACCESS TO FINANCE 4 Microfinance Banks with a combined pan-nigerian customer base of 5,000,000 customers

23 Lighting Africa (Nigeria): Consumer A2F through MFIs Strategic relevance MFIs have become strategically valuable in the evolution of the Nigerian off-grid sector. They are now both financial intermediaries and distribution channels. They become a critical piece in the context of the low purchasing power of the BOP consumer exacerbated by macroeconomic challenges. They are likely to play a key role in SHS growth. The Method Current status Working with 4 MFIs 4 MFIs have commenced granting loans Selection criteria Size, spread, willingness Key success factors: The use of BTL to target MFI customer groups, as COs are often reluctant to sell products Commitment of top management of MFI Challenges: Some MFIs don t see the opportunity Manual operations of MFIs delay roll-out Cumbersome approval processes in MFIs Fear of previous consumer finance NPL/supply constraints opportunity MFI decides the Sign MOU ApproachPresent Agree targets Preparation MFI sets up systems LN trains Credit Officers activates MFI customer groups using BTL agents that work with credit officers ActivationLA Generate leads/orders MFI orders from distributors to fulfil customer requests Review Monthly reports Review meetings

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25 Marketing and customer acquisition strategy Marketing and customer acquisition strategy has been primarily based on direct marketing activations with customers of partner MFIs, where Brand Ambassadors (engaged by BTL Agency) visit participating MFI branches and customer forums on designated days to pitch the program and the QV products. This direct engagement approach is often supported by the distribution of marketing collaterals containing product information, which prospects are given to serve as reminders as well as reference material. PROS 1. Approach ensures direct communication with prospects which eliminates the risk of message dilution and miscommunication. 2. The use of Brand Ambassadors provides robust representation, lending credibility and creating consumer confidence. CONS 1. The approach is limiting as it restricts reach to only existing customers of MFIs. 2. The MFIs strict ownership of their customers does not allow the option of following up prospects to close the sale. 25

26 Other A2F options PAYGO Uniquely positioned to aid inclusive A2F approach Supported by telcos and other collection agents Direct involvement of telcos may aid faster scale-up PAYGO companies need funding too Cooperatives Employee cooperatives May fund member purchases

27 From Lighting Light only + phone charging + Appliances + Productive Uses Evolution is not necessarily linear What next? IFC/WB has interest to support energy access in other markets, using various business models, including mini-grids Phone charging Hair cutting Welding Poultry farming irrigation???

28 Let s go to Hong Kong 2018 Global Off-Grid Solar Forum and Expo January in Hong Kong Co-hosted by GOGLA and Lighting Global Register at: