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Understanding the Impact of Distribution Costs on Uptake of OGS Products in Select SSA Countries


Despite ambitious 2020 electrification targets, many Sub-Saharan African (SSA) countries still have relatively low electricity access, especially in rural areas representing close to 85 percent of the global energy access deficit.

Studies have shown that standalone off-grid solar (OGS) products such as solar home systems (SHS) and pico products, could potentially address this electrification challenge, especially as they are a more financially viable solution for serving off-grid households than grid extension. Unfortunately, penetration of off-grid solar products has been quite inconsistent, with countries such as Malawi and Zambia, lagging substantially at 3% and 5% penetration respectively, despite significant electrification needs.

Distribution costs and other distribution barriers are considered one of the key reasons for limited uptake of off-grid solar energy systems products in Sub-Saharan Africa. This is due to two assumptions,

  1. that distribution costs have a significant impact on OGS price, therefore limiting affordability for OGS products’ target market; and
  2. that distribution barriers affect providers’ ability to deliver necessary volumes of products directly to final consumers, therefore, limiting availability of OGS products.

Further, landlocked countries such as Malawi and Zambia potentially have more significant distribution costs and barriers due to the additional distribution steps between the port of entry into Africa, to the home country point of entry.

These countries, therefore, are likely to have higher priced goods affecting the affordability of products and similarly creating limited availability of products because of the higher distribution costs and barriers. This report sought to understand the influence of distribution costs and other distribution barriers on the affordability and availability of OGS products with a particular focus on examining the differences between landlocked and non-landlocked countries, and the impact on price-sensitive, low-income earners in rural areas.

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