Upya Notes from the Last Mile: why are customers hesitant to switch to solar?
By: Upya Technologies
Tags: Africa, Development, Green Energy, Solar Energy, Clean Energy

Image: CNN

Electricity is the preferred type of energy in our modern world. Yet globally over 1.3 billion people continue to lack access to it. Many are unaware of the advantages of off-grid solar systems, such as pico-solar, solar home systems (SHS) and mini-grids. At Upya, we hope to bring end-users onto the energy ladder, resulting in cleaner, more affordable energy use addresses the 7th Sustainable Development Goal: affordable and modern energy for all. This week’s blog post outlines three key barriers to accessing sustainable energy from photovoltaic systems: sociotechnical, managerial and economic barriers. These barriers are evident in both low- and high-income economies, as well as rural and urban areas.

Sociotechnical challenges

Sociotechnical challenges are one of the main barriers preventing uptake and diffusion of solar products across the world.

Firstly, there is great emphasis on good-quality products. This translates to a regional level; Bangladeshi and Indian made solar products must meet higher quality standards than in Sri Lanka, leading to products from the latter being considered inferior. Equally, there is often a higher level of dissatisfaction with product quality from China, owing to the country’s inability to police and enforce quality standards across hundreds of manufacturers. A recent study identified growing scepticism in Africa towards Asian products, particularly those made in China. This leads to a building of mistrust towards particular manufacturers, further spurred by the presence of counterfeit and imitation solar products. Customers are however willing to pay more for good-quality products, particularly those sourced from European manufacturers such as those in Germany or France.

A second sociotechnical challenge is the access to repair locations. Many early adopters of solar, or customers in rural areas suffer from limited or challenging logistics options. Many manufacturers do not provide repairs, meaning that a solar product may be rendered redundant in the event of a minor fault. Furthermore, even in countries where repairs are offered, buyers may have to travel long distances to reach a repair centre, while the damage to their solar product may not be covered by warranty, resulting in more expenses and frustration.

A third sociotechnical challenge is the lack of adequate knowledge regarding the advantage of solar products. Not only does this lead to confusion as to how to operate the product but may result in an inability to maintain the product, which consequently may shorten its lifespan. Thus, there is a need to tailor appropriate information to audiences to account for discrepancies in literacy and culture. This lack of adequate knowledge is sometimes also reflected from the supply-side. Evidence has shown that architects and planners often lack knowledge on the advantages of PV systems, which is particularly problematic in urban areas, where competition for installation space means that solar panels may be incorrectly angled towards the sun, resulting in lower electricity generation.

Additionally, sociotechnical barriers may vary between regions; it has been noted that Tanzanians are more sceptical of solar energy technology in comparison to their northern neighbours, Kenya. This has emerged as a consequence of disparate domestic priorities and politics; TV signals, for example, evolved much later in Tanzania, resulting in less demand for related electrical devices. Similarly, in Ethiopia, many people opt not to use solar lighting once the sun goes down, owing to a high level of illiteracy negating the demand for solar-powered TVs. In these areas, demand for entertainment-related devices (solar TVs and radios) may growth, though demand for lighting will remain comparatively low.

Managerial challenges

The main challenges that relate to management concern insufficient or inappropriate strategies employed by companies. For example, some companies seeking to engage with bottom-of-the-pyramid end-users lack prior experience in this sector and provide products and pricing deals that are inappropriate for end-users earning less than $2/day. In this regard, a different approach is needed. Higher income groups may have/be able to afford back-up generators, whereas off-grid, bottom-of-the-pyramid users do not and need more flexible and affordable options.

A second issue is that many hardware providers and distributors do not realise that a functioning service needs to be provided even after the sale has been completed. This may concern installation, repairs and other such customer service issues. Repair centres and repair specialists are a significant expenditure for manufacturers/distributors, resulting in many areas being underserved, especially if they are remote. In this scenario, neither party benefits. The end-user loses out on a functioning solar product that cost a significant amount of their income, while the manufacturer develops a poor brand reputation in the area. However, by proactively offering a fully comprehensive repair service, manufacturers that engage with early adopters and influential community members may reap the benefits of reaching previously unlit communities.

Economic challenges

Solar systems pose a significant upfront investment for low-income households. Thus, solar products aimed at off-grid communities are often unprofitable without policy support. This is likely to be problematic in countries with existing policies such as fuel subsidies. Though intended to make energy affordable to those on the lowest incomes, fuel subsidies are counterproductive as they reduce the incentive to transition to cleaner sources of energy. Without demand for solar the market will not grow leading to fewer solar hardware providers/distributors permeating this space. In order to remedy this, governments ought to phase out fuel subsidies in favour of subsidies on solar products (such as tax relief) in order to kick-start the adoption of off-grid solar products.

Conclusion

At Upya we believe that clean energy should be made accessible to all, irrespective of income and geography. However, the myriad of challenges faced depend on region and culture, and the best tool we have found is a flexibility in our approach. By tackling the sociotechnical, managerial and economic challenges that are prevalent worldwide, we can make steps towards addressing SDG7. Only once there is adequate coverage and options for those at the bottom of the economic pyramid can we increase access to clean energy for all.