Off-Grid Energy key to Power Growth in Emerging Markets: WoodMac

A new analysis from Wood Mackenzie has predicted that the next decade presents a huge opportunity for the off-grid energy access sector.

off-grid solar

An estimated 420 million people now use standalone off-grid solar and another 47 million people rely on mini-grids for access to electricity. While investments in energy access have rapidly accelerated since 2016, total volumes still fall short of the total estimated financing needed to reach universal electricity access globally by 2030, according to Wood Mackenzie. However, the next decade presents a huge opportunity for the off-grid energy access sector.

Regulated kilowatt-hours were historically a low risk and low return business but climate change and the global boom in low-cost renewables have quickly made the traditional electric utility business ripe for disruption. Distributed renewables – mainly solar PV, increasingly combined with battery storage – now have highly convincing economics against costly and polluting distributed diesel for commercial and industrial demand applications.

Data from the analysis shows a total pipeline of more than 500 MW of commercial and industrial solar under development in Sub-Saharan Africa. Globally, nearly 3.5 GW of renewable energy capacity is operational or under development for powering mining applications, nearly half of which will power mines already off the grid or those looking to improve on unreliable grid power.

Benjamin Attia, Wood Mackenzie Senior Research Analyst, said “the market for off-grid renewables holds a lot more promise beyond lighting unlit households or reducing costs and fuel variability for remote, diesel-dependent industries; it represents a fundamental and dramatic evolution in the utility business model towards customer-centricity.

“Off-grid deployments will take an increasingly larger bite out of the present and future power demand on the grid, particularly where systems and incomes are large enough to support modular system upgrades over time.”

The analysis adds that on-grid and off-grid power demand will increasingly see convergence as the service offerings of next-generation distributed utilities continue to evolve and scale, even for grid-connected customers. However, the diffusion of off-grid systems is still highly interrelated with the rest of the grid. Though solar lanterns and solar home systems are an effective and targeted solution for rural households, small-scale distributed solutions cannot power industrialisation and economic growth.

While the future grid will be increasingly renewable, low-cost, digitally-managed and eventually demand-following, low energy access countries’ urgent need for large utility-scale generation and grid infrastructure upgrades cannot be overstated. “Therefore, the most game-changing growth factor for the off-grid renewables sector will be centralised and integrated electrification planning,” added Attia.

Ayush Verma

Ayush Verma

Ayush is a staff writer at saurenergy.com and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for iamrenew.com.

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