CANBERRA — The use of off-grid solar products has skyrocketed over the past five years in Papua New Guinea, with 60% of households now using solar lighting — up sharply from just 2% in 2012, according to a new report by the International Finance Corporation.
As a result, Papua New Guinea now has one of the highest rates of use of off-grid solar lighting in the developing world, according to the report “Going the Distance: Off-Grid Lighting Market Dynamics in Papua New Guinea.” Part of this is due to the fact that 87% of the population — or 7.2 million people — are not connected to the electricity grid.
But the increased use of mobile technology has also played a major role. The report showed the transition happened at a time when mobile phone penetration was growing rapidly, but the means to charge phones was lagging.
“In a number of countries with high mobile penetration and low energy access, solar solutions with mobile charging sees a major uptake.”— Subrata Barman, lead, IFC energy advisory program in the Pacific
Off-grid solar products on the PNG market now include generic battery powered torches and lanterns, as well as IFC quality-verified off-grid solar products — with many providing the ability to charge a phone.
“In a number of countries with high mobile penetration and low energy access, solar solutions with mobile charging sees a major uptake,” Subrata Barman, the lead of IFC’s energy advisory program in the Pacific, told Devex. “This is because people need the energy to charge their mobiles, and there is also an attempt by mobile companies to launch initiatives for mobile charging. It is important to remember that the revenues of mobile companies are directly related to handsets being charged.”
The mobile factor
About 97% of quality-verified products sold between 2014 and 2017 were pico products — which are small solar powered system used for lighting that can also support charging small devices such as mobile phones — the report explained. In PNG, 83% of these products include a mobile phone charger. The report said that surveys showed the most valuable feature of these devices was the ability to charge phones.
This demand for products supporting mobile charging has resulted in a market gap for products powering larger appliances, including fans and refrigerators. But the report explained suppliers are currently exploring opportunities.
Data on household spending shows that off-grid households spend around 535 kina per fortnight, or $329 a month, on a range of typical purchases, with less than 5% spent on lighting products. According to the report, this makes lighting one of the larger expenditure items, ahead of health or mobile phone services.
But the report found in PNG, household income does not seem to be a barrier to purchasing lighting products and is not a determining factor in deciding the type of lighting products they will use.
“This is particularly true for pico systems, small solar lanterns which are often bought off-the-shelf,” said Barman. “However, as people’s aspirations change and they need larger solar systems, household income would play an important role, and there would be a need to provide financing to acquire larger products We call it the next step in the energy ladder and the growth of that market has been constrained due to affordability and lack of finance for such consumers, who often work in the informal sector or agriculture and do not have a credit history.”
Growing the market
Despite the rapid growth in off-grid solar and mobile phones, there is still a large segment of the population with no access to solar products or the power grid. Very remote areas away from entry ports for products entering PNG are currently missing out on solar or are faced with higher cost due to the addition of transportation.
The government hopes to change that.
“The government of PNG has set a target of 70% electrification by 2030, and there is a general acceptance that part of this electrification would be met by off-grid solutions that would comprise a mix of mini-grids and solar home systems,” Barman said.
The PNG electrification partnership — which is supported by the governments of Australia, New Zealand, United States, and Japan — is also working on various initiatives to meet this electrification target, with solar considered complementary to the expansion of the electrical grid, rather than being viewed as a competitor to it.
“There are cases where consumers facing unreliable grid situations use OGS as a backup,” Barman said.
With PNG ranked the 22nd lowest country for mobile ownership by the World Bank in 2017, growth of phone penetration may also improve solar access. It is also an opportunity for additional businesses to provide solar solutions for PNG.
“The PNG market is open to all countries,” Barman said. “China happens to be a dominant player in this space, especially with respect to manufacturing. Other countries are also building manufacturing capacity as the market grows.”
In analyzing the data and opportunities for solar in PNG, IFC provided four suggestions to help improve market growth: The continued promotion of quality-verified solar products to build consumer confidence in the products; deepening of distribution pathways to reach the last-mile in market penetration; preparing for the next stage in the market for upgrades and replacements; and targeting strategic sales — including locations, partners, and times.
“IFC is keen to engage and drive more private sector participation in the off-grid sector in PNG,” Barman said. “We would be working closely with government, regulators, and the private sector to help scale up off-grid electrification in PNG.”