Developing the route to market: A tool for expanding off-grid solar product distribution

Power Africa

The USAID-funded Power Africa Off-grid Project provides technical assistance and targeted grant funding to support the development of Africa’s off-grid solar home system (SHS), mini-grid, and productive use of energy (PUE) sectors. The Project accelerates private sector-led energy access in the off-grid market by offering investors broad-based market intelligence to inform financial products; advising governments to design and implement supportive policy frameworks; and providing hands-on tailored support to companies.

The Project employs five work streams that enable OGS companies and African governments to provide more off-grid electricity connections throughout the continent. Market dynamics is one of these work streams. Market dynamics serves the off-grid sector through gathering and disseminating market intelligence to companies, investors, and governments to inform them of the latest sector developments and to support them in making informed decisions.

Purpose of the Tool

In early 2020, the Project met several manufacturers and suppliers of off-grid products in Nairobi. Many of these companies are relatively new to the market and are looking for support to enable them to penetrate and grow. These new suppliers reflect a wider shift in the industry away from vertical integration towards a diversified, more competitive supply structure. The manufacturers and suppliers requested introductions to potential distribution partners and business-development support services.

However, following an initial assessment of the current distributor network, the Project concluded that there was a need to look outside of the existing distributors to expand the network. The currently limited distributor network needs to be expanded, especially because it has already been exhausted by other offgrid solar (OGS) companies.

Power Africa engaged other market-enablers such as the Global Distributors Collective (GDC) to explore how the Project can make the most of its distributor database. However, this approach had limited success as the majority (over 60 percent) of GDC’s members already distribute off-grid products, leaving just a small number of untapped distributors. Power Africa has developed a tool, with support from Practical Action Consulting (PAC), to guide OGS companies in identifying new last-mile distribution partners that may be able to help them get their solar systems to customers in the countries they serve. This tool aims to help OGS companies achieve the following objectives:

  1. Identify the regions in each country of operation that have the most suitable distributors of off-grid solar products.
  2. Identify and analyze wholesale, retail, and last-mile distribution channels across industries operating in different regions in a country.
  3. Qualify and prioritize a network of the most suitable distribution channels that OGS companies can partner with to sell off-grid solar products.

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