Over the last ten years, the energy-access sector has brought millions of solar home systems to market. These systems helped many off-grid families, mainly in Africa, fully cover their energy needs using sustainable, renewable power sources.
The next big thing we all expected was to see solar technologies become popular for productive use. Productive use refers to machinery, tools and appliances that small businesses and smallholder farmers can use to perform their work (e.g. milling, solar water pumping, coffee pulping) more effectively, which would increase their productivity and improve their livelihoods.
Unfortunately, that has not been the case—which is why our partner Access to Energy Institute (A2EI) decided to investigate the barriers to adopting and scaling solar-powered appliances for productive use. Knowing the barriers would help the energy-access sector overcome them.
Today A2EI is publishing its report to help others in the sector promote the right technologies for small, off-grid business owners to improve their incomes.
Understanding the benefits
A2EI started their investigation by asking: Why would a customer buy a solar-powered, productive-use technology?
They believe the most important benefit is the ability to earn income from the technology. This marks a fundamental difference between productive-use technologies and other products, such as entertainment appliances.
Rather than just looking at the efficiency of solar appliances and at the cost of electricity, they took a broader approach. One of their key findings in their report, which they launched today, was that “it’s not just about technology”. For a productive-use appliance to be adopted successfully, three things need to come together: It needs to be desirable (i.e. the customer must want it), feasible (the technology must work) and viable (a business must be able to successfully bring it to market).
Creating a model
They calculated the income earned per hour and per day, and they analysed how much of that income was needed to repay the cost of the appliance. They checked whether there was enough demand for the product locally, what kind of training and skills were required to operate the machinery and to market the output, and how the appliance compared to alternatives. This modeling approach was applied to ten productive-use appliances used in smallholder farming in Tanzania. Based on the results, A2EI recommended which appliances should be pursued as viable business models.
Elliot Avila, the report’s lead author, said: “The most important thing to come out of this paper is the recognition that a model is essential to any conversation on productive-use. The modeling approach allows for a high level of detail, creates transparency, and makes it simple to consider different scenarios.”
A2EI believes that by providing all data in an open-source manner, transparently outlining all assumptions underlying the methodology and defining corresponding terminology, this report will help develop a common understanding and vocabulary about solar productive-use appliances. This way, we hope to inspire further research and strategies for people in rural communities to adopt solar technologies with the highest potential of improving their livelihoods.
Jolanda van Ginkel, IKEA Foundation programme manager, said: “This report by the A2EI sheds light into the complex field of solar productive-use solutions for rural households. Its insights will support the growth of solar solutions in rural areas, enable small businesses, smallholder farmers and their families to increase their income and improve their livelihoods.”