GOGLA data shows that by 2022 the off-grid market has increased by 60%

According to the Off-Grid Solar Industry Association (GOGLA) investment database, by 2022 the off-grid sector has seen a significant 63% increase in investment, driven by market leaders. The database is available for consultation here.

Still, the second major finding of the analysis was that more funding needs to be made available for the provision of clean and affordable energy.

The data reveals that the global off-grid solar sector had a record investment of $746 million in 2022, increasing by $289 million or 63% on a year-on-year basis. Total cumulative investment in the sector is now $3.1 billion to date.

For this analysis, GOGLA divided companies in the sector into three categories: (1) expansion, with investment volumes of more than $100 million; (2) start-up, with investment volumes of $3 million to $100 million; and (3) seed, which received funding of up to $3 million.

GOGLA conclusions

Even though the sector has attracted US$3.1 trillion historically in debt, equity and grants, an investment of US$23.3 billion is required to achieve basic universal access to energy (Tier 1) and US$48.8 billion to ensure access to supply of large appliances such as refrigerators (Tier 3).

An estimated 300 million people with access to off-grid energy are connected to emerging markets rather than already developed and consolidated markets. This requires a greater focus on new financial mechanisms to reach early-stage companies and thus contribute to the continued growth of the sector in the short and long term.

Investment must also take into consideration all the needs of the sector; this specifically concerns new products that have been developed and that need financing for consolidation in the market.

Solar home systems are also driving basic access to electricity. The IEA World Energy Outlook 2022 found that for the first time since they began tracking it, the total number of people around the world without access to energy has begun to increase. At the same time, the challenge of attracting sufficient investment to achieve basic energy access is getting worse.

While the investment successes of 2022 should not be underestimated, there needs to be a step-change in financing for the off-grid sector to ensure clean energy access for all by the end of the decade.

Financial instruments that combine equity, grant, and debt capital, along with a patient approach to returns, are essential to reduce risk and incentivise companies to reach hundreds of millions of people with clean tech solar solutions.