Market for SL and SHS with consumer financing Adding a consumer finance dimension to the same products increases the size of the potential market to almost US $57 million. The inclusion of this option means the poorest households can enter the market while those already in the market are now able to afford larger, more versatile systems. Similarly, consumer finance creates an additional market for larger solar home systems that was entirely absent in the scenario without financing. As shown in Figure 11, larger solar home systems (>10W) now make up around 10% of the market by sales volumes, but over 55% of its value. In contrast, the simple study light represents 57% of market sales volume, but only 6% of value. Figure : Solar lantern and solar home system sales volume potential with consumer financing As in the case with no consumer financing above, the proximity of the lower deciles to one another in terms of energy expenditure means that the market size for cheaper products is highly sensitive to small changes in pricing and financing parameters. In this case, the decile distribution means that poorer consumers are either able to afford only the simple study light, or are already able to afford the light and mobile charger, leaving a gap for the standing light. In reality, we would expect that some of the market from the study light and the light and mobile charger would spill over into the standing light market. Figure : Solar lantern and solar home system market by Region with consumer financing The analysis assumes that households that are able to regularly make a payment towards a solar device are also able to save up to three months to pay the upfront deposit (typically 10% of the over-the-counter purchase price, representing up to 3 times the monthly payment). If instead households are only able to spend their existing monthly energy spend on the upfront deposit, for instance, the market shrinks by about 25%. Further data on household saving patterns and non-financial forms of wealth (e.g. livestock) would be needed to test this assumption more closely. On the other hand, the model is potentially conservative in that it assumes that each household only purchases one unit. Our experience from other Sub Saharan African markets suggest that typically a significant number of households would purchase more than one unit, especially for smaller, lower-cost systems. Consumer benefits from switching to solar We now analyze household consumer benefits from switching from traditional lighting methods to solar. Our focus groups revealed that the number one lighting method currently used in
Market for SL and SHS with consumer financing Adding a consumer finance dimension to the same products increases the size of the potential market to almost US $57 million. The inclusion of this option means the poorest households can enter the market while those already in the market are now able to afford larger, more versatile systems. Similarly, consumer finance creates an additional market for larger solar home systems that was entirely absent in the scenario without financing. As shown in Figure 11, larger solar home systems (>10W) now make up around 10% of the market by sales volumes, but over 55% of its value. In contrast, the simple study light represents 57% of market sales volume, but only 6% of value. Figure : Solar lantern and solar home system sales volume potential with consumer financing As in the case with no consumer financing above, the proximity of the lower deciles to one another in terms of energy expenditure means that the market size for cheaper products is highly sensitive to small changes in pricing and financing parameters. In this case, the decile distribution means that poorer consumers are either able to afford only the simple study light, or are already able to afford the light and mobile charger, leaving a gap for the standing light. In reality, we would expect that some of the market from the study light and the light and mobile charger would spill over into the standing light market. Figure : Solar lantern and solar home system market by Region with consumer financing The analysis assumes that households that are able to regularly make a payment towards a solar device are also able to save up to three months to pay the upfront deposit (typically 10% of the over-the-counter purchase price, representing up to 3 times the monthly payment). If instead households are only able to spend their existing monthly energy spend on the upfront deposit, for instance, the market shrinks by about 25%. Further data on household saving patterns and non-financial forms of wealth (e.g. livestock) would be needed to test this assumption more closely. On the other hand, the model is potentially conservative in that it assumes that each household only purchases one unit. Our experience from other Sub Saharan African markets suggest that typically a significant number of households would purchase more than one unit, especially for smaller, lower-cost systems. Consumer benefits from switching to solar We now analyze household consumer benefits from switching from traditional lighting methods to solar. Our focus groups revealed that the number one lighting method currently used in