Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Insights from the Energy Ladder Research in Uganda

144 views

Published on

Uganda has the third largest off-grid solar market in the world, and the last two years realized a 25% growth rate in the off-grid solar industry for Uganda. Off-grid solar solutions clearly contribute to improving access to power, but how can it be recognized and supported as a mainstream solution to improving electrification, especially in the new Energy Policy?

Published in: Environment
  • Be the first to comment

  • Be the first to like this

Insights from the Energy Ladder Research in Uganda

  1. 1. Insights from the The Energy Ladder Research, Uganda Richa Goyal Schatz Energy Research Center Closing the energy access gap through off-grid solutions Solar 4 Uganda Thinkshop April 26, 2018
  2. 2. Contents 1. Ways in which end-users adopt higher levels of solar energy access 2. Motivations for purchase – In particular role of flexible financing in increasing system affordability 3. User preferences for subsequent purchases
  3. 3. Level 1: Solar portable lamps(SPL) owners (226 respondents) Level 2: Small solar home system kit owners (166 respondents) Level 3: Large solar home system owners (162 respondents) Constructing the notional solar energy ladder in the sampling plan Who were the respondents
  4. 4. Key insights 1. We reject the solar energy ladder hypothesis. 2. We observe energy stacking behavior. 3. Adoption rate: • For subsequent purchases of solar energy products, impulse buying is low and planned buying is high. • Existing solar users that profess to purchase solar products constitute a promising upsell opportunities pool. • Lead conversion rate for subsequent purchases is high. 4. Fulfilling lighting energy demand by stacking solar lighting products, and buying solar components such as panels and batteries to expand existing system capacity are popular solar product purchases. 5. Direct marketing, referrals and demonstration effect, play a big role in driving sales. 6. Flexible financing on solar products together with avoided energy spending on fuels do not lead to rapid economic payback on solar home systems. Quality of life improvements are a greater driver than economic payback for adoption of SHSs. 7. Users prefer to avoid flexible financing for subsequent purchases. Dealer stickiness for subsequent purchases is significant.
  5. 5. Solar product adoption patterns
  6. 6. Solar Energy Ladder? Biomass based fuels E.g. cow dung, firewood Traditional fuels: E.g. kerosene, coal, charcoal Modern energy: E.g. LPG, electricity Original Energy Ladder Energy stacking? Diagram showing the conceptual solar energy ladder The energy ladder hypothesis was adapted into a hypothetical construct of a ‘solar’ energy ladder
  7. 7. Respondents that bought their first product in 2015 Total respondents % Level 1 221 226 98% Level 2 163 166 98% Level 3 150 162 93% Solar energy ladder hypothesis does not hold! Hypothesis violation 1: Users do not need to purchase smaller systems before buying big ones Percentage of respondents that purchased a solar product for the first time in the year 2015 Annual income in USD of respondents across different levels of solar energy access
  8. 8. Within-solar product stacking – who bought what Hypothesis violation 2: Users stack solar products and not substitute smaller ones with bigger ones Level of solar energy access Overall actual purchasers Systems with lights Overall actual adoption rate Light adoption rate Components bought to expand current solar system System expansion rate Level 1 44 40 22% 91% 0 0% Level 2 26 15 18% 58% 6 23% Level 3 22 9 15% 41% 3 14% Total 92 64 18% 70% 9 10% Popular solar energy products bought by subsequent purchasers (respondents that bought at least one other solar energy product between baseline (May-Jun, 2015) and endline (Feb, 2017) surveys.
  9. 9. Individual trends lines for daily energy use in Wh across all solar systems owned by respondents Note: Graph has been zoomed to optimize graphing area. Some Level 3 respondents have daily energy service exceeding 600 Wh. Solar off-grid energy adoption trends over time
  10. 10. Solar off-grid technology stacking behavior Solar and non-solar technology and fuel stacking Deliberative stacking This is often observed in the case of cooking fuels. We do not observe stacking of solar with non-solar technologies as a result of a free choice of user. Constrained stacking Users are constrained to use technologies such as dry cell torches, kerosene lamps and candles albeit in reduced quantities for energy security purposes post purchase of solar systems, leading to a limited ‘stacking’ behavior. Within-solar stacking This type of stacking is observed as availability of a diverse range of commercial off-grid solar products allows users to fulfil their energy demand in parts Breaking down stacking solar and non-solar technologies and fuels among users
  11. 11. Solar with non-solar stacking Respondents’ use of non-solar energy fuels and technologies
  12. 12. Motivations for purchase
  13. 13. Key prior experiences or information that influenced users to purchase each of the solar products they own Factors that influenced end-consumer purchase decisions Note: Respondents could report more than one influencing factor.
  14. 14. Motivations for purchasing a solar home system as the first solar product Reasons why Level 2 and Level 3 respondents bought a solar home system in their first product purchase Note: Graph reports within level percentages. E.g. 66% Level 3 respondents bought a big system because they had demand for many lights. Respondents could report more than one motivation.
  15. 15. 1 33 1 Graph shows monthly savings for typical customers of each level of solar energy access Is motivation for purchase an economic one? - Net present value (NPV) analysis for typical customers Level 1 typical users Level 2 typical users Level 3 typical users
  16. 16. Solar Product Adopted in 2015 Level of solar energy access Solar scenario description NPV over two years in 2015 money Break-even period if less than 2 years CommentsPayment method for solar product Median monthly savings due to avoided spending on status-quo fuels Simple lantern Level 1 Complete upfront payment of $10 $2.76 $ 56.84 4 months Almost 5.7x benefit over two years Single light with mobile charging Complete upfront payment of $24.2 $2.76 $ 40.62 10 months Almost 1.6x benefit over two years Small 3-light kit (10 W solar module) Level 2 Complete upfront payment of ~$156 $3.61 -$102.16 N/A There is net cash outflow during the analysis period (2 years). PAYG payment plan: Down payment: $18; Monthly payment: ~$10; Repayment period: 18 months $3.61 -$127.85 N/A Large 3-light SHS with TV (50 W solar module) Level 3 Complete upfront payment of ~$546 $5.25 -$541.43 N/A There is substantial net cash outflow during the analysis period (2 years). Micro-credit payment plan: Down payment: ~$117; Monthly payment: ~$28.50; Repayment period: 24 months $5.25 -$735.39 N/A Results of a net present value analysis Is motivation for purchase an economic one? - Net present value (NPV) analysis for typical customers cont.
  17. 17. Preferences for subsequent purchases
  18. 18. Adoption rates *Baseline pool: Respondents selected for analysis at baseline †Planned purchasers: Respondents that planned to purchase solar product(s) at baseline ‡Planned unreachable at endline: Respondents that were unreachable at endline from within the pool that planned to purchase solar products(s) at baseline ⁰Planned-actual purchasers: Respondents within the pool that planned to purchase a product at baseline, that purchased a solar product between baseline and endline surveys ꬹPlanned-actual adoption rate: Adoption rate from within the pool that said they planned to purchase at the time of baseline ⱡTotal unreachable at endline: Total respondents that were unreachable at endline ꙳Overall actual purchasers: Total respondents that purchased solar product(s) between baseline and endline Table and the figure represent how many respondents planned and actually purchased solar products between baseline (May-June, 2016) and endline surveys (Feb, 2017) Baseline pool* Planned purchasers† Planned adoption rate Planned unreachable at endline‡ Respondents at endline Planned-actual purchasers⁰ Planned-actual adoption rateꬹ Total unreachable at endlineⱡ Overall actual purchasers꙳ Overall actual adoption rate Syste wit ligh Level 1 226 169 75% 21 201 34 23% 25 44 22% 40 Level 2 166 150 90% 16 148 25 19% 18 26 18% 21 Level 3 162 123 76% 6 150 20 17% 12 22 15% 12 Total 554 442 80% 43 499 79 20% 55 92 18%
  19. 19. Users’ preferences for subsequent purchase of energy product(s): Summary Key metrics Level 1 Level 2 Level 3 Preference for upfront payment using personal savings 98% 97% 95% Dealer stickiness 24% 74% 73% Preference to purchase from a different 'known’ dealer 9% 2% 4% Preference for PAYG as financing method 0% 0% 0% Preference to purchase non-solar energy products or take utility grid connection <1% <1% 0% This Table summarizes some of the key highlights from the ‘subsequent purchase analysis’
  20. 20. Dealer stickiness Level 1 Count % Not sure 112 66% SunnyMoney 41 24% Unknown solar shop 5 3% Electronics shop 4 2% Fenix 3 2% Solar Now 2 1% Solar Solutions 1 1% Pallisa Teacher's SACCO 1 1% Utility grid 1 1% Total 170 100% Level 2 Count % Fenix 111 74% Not sure 36 24% Unknown solar shop 1 1% Solar Now 1 1% Utility grid 1 1% Total 150 100% Level 3 Count % SolarNow 90 73% Not sure 28 23% Soltec 1 1% M-Kopa 1 1% Sunshine Solar 1 1% Construct solar systems 1 1% Solar Solutions 1 1% Total 123 100% The tables shows the dealer with whom respondents that planned to make subsequent purchases at the time of baseline survey (May-Jun, 2015)
  21. 21. Acknowledgements • The research benefitted from the following organizations and individuals • UNCDF CleanStart Team: Hee Sung Kim, Robin Gravesteijn & Vincent Wierda • Research advisory board: Kat Harrison, Acumen & Michael Nique, GSMA • Fieldwork implementing agency: CIRCODU
  22. 22. Research contacts: Richa Goyal richa.goyal@Humboldt.edu & Dr. Arne Jacobson arne.jacobson@Humboldt.edu During Baseline survey, Energy Ladder Research Image by Richa Goyal, taken during Baseline Survey fieldwork, 17 May – 2 June, 2016
  23. 23. Back-up slides
  24. 24. Research methods and timeline March, 2016 Stakeholder feedback process Solar off- grid product distribution chain mapping Baseline surveys: Phone interviews Baseline surveys: Face to face interviews Endline surveys: Phone interviews April, 2016 May-Jun, 2016 Jun-Jul, 2016 Feb, 2017
  25. 25. Retail footprint in districts where the study was implemented Solar shops interviewed in Luwero district Solar shops interviewed in Pallisa district The red dots indicate the GPS location of solar retailers that were interviewed as part of distribution mapping for this study
  26. 26. Solar off-grid opportunity in Uganda 1. The grid electricity is erratic and of poor quality Collapsed electricity pole in farmland along the Kampala-Tirinyi highway that crosses Pallisa district End-user perception on electricity tariff rates in rural Uganda 3. Respondents showed a keen understanding of the high cost of fuel- based lighting End-user savings after investing in solar energy product(s) 2. High cost of grid electricity
  27. 27. Sample design: Original sample design strategy The table details original plan for sampling - Total 700 respondents including 100 respondents to account for attrition between baseline and endline surveys Data partner Type of product Level of solar energy access Payment method Baseline surveys - Phone interviews Baseline surveys – Surveys for addressing attrition between baseline and endline surveys Baseline surveys – Face to face interviews‡ SunnyMoney and GreenLight Planet Single light products without mobile charging Level 1 Cash or credit 150 70† 25 Single light product with mobile charging 150 25 Fenix International Small plug and pay solar home system kits Level 2 Mobile money based pay-as-you-go (PAYG) 150 15 20 SolarNow Advanced component based solar home systems Level 3 Micro-credit 150 15 20 Total respondents 600 100 100 ‡ Face to face interviews were conducted with a subset of phone interviewees within each respondent group. †SunnyMoney sales records were not digitized. Further, since a significant portion of their sales occurred via solar agents, the sales records were expected to be less accurate. Therefore, a attrition rate higher than other respondent groups was factored in for SunnyMoney respondents. Endline phone surveys were planned to be conducted with the baseline respondents selected for analysis.
  28. 28. Sample design: Usable surveys for analysis Respondents with duplicate records and other data entry errors were eliminated as follows. During baseline surveys – • 615 phone interviews were conducted, 15 of which had to be discarded. • 117 face to face interviews were conducted, 3 of which had to be discarded. During the endline surveys, 543 phone interviews were conducted, 2 of which had to be discarded. The final number of usable surveys are as follows. Data partner Largest product respondents owned at the time of baseline surveys Baseline surveys - Phone interviews Baseline surveys – Face to face interviews* Endline surveys - Phone interviews SunnyMoney and GreenLight Planet Single light system without mobile charging 134 21 119 Single light system with mobile charging 92 31 81 Multi-light kit 37 7 37 Solar home system with lights and at least one other appliance 8 2 5 Total SunnyMoney respondents 271 61 242 Fenix International Multi-light kit with/without other appliances 166 30 148 Solar home system greater than or equal to 50W in panel size 1 - 1 Total Fenix respondents 167 30 149 SolarNow Solar product was a solar home system greater than or equal to 50W 162 23 150 Total SolarNow respondents 162 23 150 Total respondents 600 114 541 Level 1 Level 2 Level 3
  29. 29. Sample design: Final sample size selected for analysis In the final surveys selected for analysis, respondents within SunnyMoney/GreenLight Planet group that had a system with more than one light and the respondent within the Fenix group that had a product with panel size >=50W were removed. This was done to achieve 3 respondent groups as follows: Data partner Largest product respondents owned at the time of baseline surveys Level of solar energy access at the time of baseline surveys Payment method Baseline surveys - Phone interviews Baseline surveys - Face to face interviews* Endline surveys - Phone interviews SunnyMoney and GreenLight Planet Entry level single light systems Level 1 Cash or credit 226 52 200 Fenix International Plug and pay small solar home system kits Level 2 Mobile money based pay-as-you-go (PAYG) 166 30 148 SolarNow Advanced solar systems with larger PV panels (>=50 Wp) Level 3 Micro-credit 162 23 150 Total respondents 554 105 498
  30. 30. Welch’s one-way analysis of means (not assuming equal variances) Data: Annual_income_USD and Solar_level F = 10.045, num df = 2.00, denom df = 220.38, p-value = 6.685e-05 Tukey multiple comparisons of means at 95% family-wise confidence level Data: Annual_income_USD and Solar_level Test results for differences in income between levels of solar energy access The table shows test results for Welch’s one-way ANOVA and Tukey multiple comparisons of mean incomes between the three solar levels Welch’s ANOVA test for unequal variances shows that incomes are significantly different between the three levels. Further, the Tukey multiple pairwise-comparison shows that difference between income means of level 1 and 2 is statistically insignificant, while difference between income means of levels 1 and 3 and that of levels 2 and 3 is statistically significant.
  31. 31. Level Median daily energy service Wh 2013 Median daily energy service Wh 2014 Median daily energy service Wh 2015 Median daily energy service Wh 2016 Median daily energy service Wh 2017 % change in daily energy service Wh from 2015 to 2016 Level 1 0 0 1.86 4.08 4.08 119% Level 2 0 0 43.35 43.35 43.35 0% Level 3 0 0 127.5 127.5 127.5 0% Income quartile Level Sample size (n) Median daily energy service Wh 2013 Median daily energy service Wh 2014 Median daily energy service Wh 2015 Median daily energy service Wh 2016 Median daily energy service Wh 2017 % change in daily energy service Wh from 2015 to 2016 Income quartile 1 Level 1 48 0 0 1.86 4.08 4.08 119% Level 2 40 0 0 25.5 31.08 31.08 22% Level 3 27 0 0 127.5 127.5 127.5 0% Income quartile 2 Level 1 58 0 0 1.86 1.86 1.86 0% Level 2 29 0 0 25.5 26.47 26.47 4% Level 3 23 0 0 127.5 127.5 127.5 0% Income quartile 3 Level 1 46 0 0 1.86 5.01 5.01 169% Level 2 30 0 0 43.35 43.35 43.35 0% Level 3 31 0 0 127.5 127.5 127.5 0% Income quartile 4 Level 1 37 0 0 1.86 4.08 4.08 119% Level 2 24 0 0 43.35 43.35 43.35 0% Level 3 55 0 0 127.5 127.5 127.5 0% The table shows daily energy use in Wh for respondents across each level of solar energy access Solar off-grid energy adoption trends over time – Available daily energy use measured in Watt Hours (Wh) cont. The table shows median daily energy use in Wh for respondents across each level of solar energy access and income quartiles Key takeaways - - Level 1 has more than 100% increase in median daily energy service from year 2015 to 2016. This is because adoption rate is higher for Level 1 respondents than Level 2 and 3. Level 2 and 3 respondents fulfil their lighting demand efficiently with minimum number of systems by investing in multi-light kits. Level 1 respondents ‘stack’ solar lighting systems to fulfil their lighting demand. See section ‘Adoption rates’. - In Levels 1 and 2, there is a noticeable increase in daily energy service levels in income quartiles 3 and 4 when compared with income quartiles 1 and 2. - The daily energy service levels for Level 2 and 3 are fairly consistent across the years. Note: 106/554 respondents did not report income. These tables reflect median daily energy service levels only for those respondents that reported income.
  32. 32. Savings in energy spending in status-quo fuels by shifting to solar off-grid energy products The graphs show the savings in energy spending on status-quo fuels across respondents in the 3 levels of solar energy access Key takeaways An average rural Ugandan anywhere between 2-8 litres of kerosene a month. Consumption of candles and dry cells is relatively high – 75% respondents use up to 80 candles and up to 16 dry cells a month.
  33. 33. Net present value (NPV) analysis for typical customers across all levels - Description of customer profile chosen for analysis We identified typical users of solar products within each solar energy level to perform a NPV analysis of the solar scenario as opposed to the scenario where the user does not use any solar products. These users are described as follows - Level 1 1.1 Lantern user - ~43% Level 1 users purchased a 0.5W lantern in that meets Lighting Global standards in 2015, and did not purchase a solar product after. 1.2 Single light with mobile charging user - The median energy service derived from various solar products owned by Level 1 users corresponds to the use of a 1.5W single light and mobile charging. This product meets Lighting Global standards. The users purchased the light in 2015 and did not any other solar product after. Level 2 2.1 Small 4-light kit user - ~36% Level 2 users purchased a 17W product with 4 lights, mobile charging and a radio with a built-in torch. They purchased the product in 2015 and did not purchase any other solar product after. 2.2 Small 3-light kit user - ~22% Level 2 users purchased a 10W product with 3 lights, mobile charging and a radio with a built-in torch. They purchased the product in 2015 and did not purchase any other solar product after. Level 3 3.1 Large 3-light kit user - ~37% Level 3 users purchased a 50W product with 3 lights, mobile charging and a radio. 3.2 Large 3-light kit with TV user - ~31.5% Level 3 users purchased a 50W product with 3 lights, mobile charging, radio and an 18.5-inch TV. In the table below, the median daily energy service (DES) in Wh available from the solar off- grid products owned by each user are listed by year. Year Level 1 Level 2 Level 3 Lantern user Single light with mobile charging user Small 4-light kit user Small 3-light kit user Large 3-light kit user Large 3-light kit with TV user DES until 2013 0 0 0 0 0 0 DES in 2014 0 0 0 0 0 0 DES in 2015 0.96 3.46 41.07 38.07 65.57 185.57 DES in 2016 0.96 3.46 41.07 38.07 65.57 185.57 DES in 2017 0.96 3.46 41.07 38.07 65.57 185.57
  34. 34. Note: Graph has been zoomed to optimize graphing area. Some outliers have been excluded. Some respondents have monthly savings going up to $50. Does ‘stacking’ single light systems have a better pay-off than purchasing a multi-light kit? Key takeaways ₋ Savings from purchasing a single product with many lights can be similar to savings from ‘stacking’ several single light systems, but, the cost of multi-light kits is substantially higher. Therefore, motivation for purchasing a multi-light kit is not an economic decision, but has a more aspirational character. ₋ Median monthly savings of ‘Single light system stackers’ is 63% more than other Level 1 users that use single light Level 1, and is between 21-25% more than small multi-light kit users at Level 2. Graph shows monthly savings for typical customers of each level of solar energy access alongside users that stacked single light systems. Single light system stackers are defined as Level 1 users that purchased multiple single light systems with or without mobile charging, instead of purchasing a single product with more than one light.
  35. 35. Some users stack solar products Tables shows solar product adoption rates and who bought what? Table and the figure represent how many respondents planned and actually purchased solar products between baseline (May-June, 2016) and endline surveys (Feb, 2017) Baseline pool* Planned purchasers† Planned adoption rate Planned unreachable at endline‡ Respondents at endline Planned-actual purchasers⁰ Planned-actual adoption rateꬹ Total unreachable at endlineⱡ Overall actual purchasers꙳ Overall actual adoption rate Syste wit ligh Level 1 226 169 75% 21 201 34 23% 25 44 22% 40 Level 2 166 150 90% 16 148 25 19% 18 26 18% 21 Level 3 162 123 76% 6 150 20 17% 12 22 15% 12 Total 554 442 80% 43 499 79 20% 55 92 18% Level of solar energy access Overall actual purchasers* Systems with lights† Overall actual adoption rate Light adoption rate Components bought to expand current solar system‡ System expansion rate Level 1 44 40 22% 91% 0 0% Level 2 26 15 18% 58% 6 23% Level 3 22 9 15% 41% 3 14% Total 92 64 18% 70% 9 10% The table shows the popular solar energy products bought by subsequent purchasers (respondents that bought at least one other solar energy product between baseline (May-Jun, 2015) and endline (Feb, 2017) surveys.
  36. 36. Dealer stickiness Level 1 Count % Not sure 112 66% SunnyMoney 41 24% Unknown solar shop 5 3% Electronics shop 4 2% Fenix 3 2% Solar Now 2 1% Solar Solutions 1 1% Pallisa Teacher's SACCO 1 1% Utility grid 1 1% Total 170 100% Level 2 Count % Fenix 111 74% Not sure 36 24% Unknown solar shop 1 1% Solar Now 1 1% Utility grid 1 1% Total 150 100% Level 3 Count % SolarNow 90 73% Not sure 28 23% Soltec 1 1% M-Kopa 1 1% Sunshine Solar 1 1% Construct solar systems 1 1% Solar Solutions 1 1% Total 123 100% The tables shows the dealer with whom respondents that planned to make subsequent purchases at the time of baseline survey (May-Jun, 2015) Key takeaways – - Dealer stickiness is significant, >70%, for Level 2 and 3 respondents, but not because of the credit financing option these dealers provide. 97% of total respondents prefer to make subsequent purchases by paying for the full cost of system upfront using personal savings. - Dealer stickiness rate for Fenix is 75%; 90% of Level 2 respondents planned to make a subsequent purchase at the time of baseline survey – none preferred to use PAYG financing. - Successful direct marketing has a role to play in high dealer stickiness: Dealer stickiness is high in part because of low proximity to solar product dealers. Most dealers are located in central towns or highways, and dealers seek out customers through direct marketing. - Significant upsell opportunities exist for dealers within the existing customer base.
  37. 37. Users' plans for subsequent purchase of energy product(s) for Level 1 respondents Preferred dealer Preferred financing method Available sales method of preferred dealer Preferences for subsequent planned purchases of respondents that planned on making further energy product purchases at the time of baseline (May-Jun, 2016)
  38. 38. Users' plans for subsequent purchase of energy product(s) for Level 2 respondents Preferences for subsequent planned purchases of respondents that planned on making further energy product purchases at the time of baseline (May-Jun, 2016)
  39. 39. Users' plans for subsequent purchase of energy product(s) for Level 3 respondents Preferences for subsequent planned purchases of respondents that planned on making further energy product purchases at the time of baseline (May-Jun, 2016)
  40. 40. Effectiveness of mobile money based PAYG systems in driving digital financial inclusion
  41. 41. Mobile money as a savings tool The graphs show percentage of respondents that save money and popular savings instruments by each level.
  42. 42. Motivation for adoption of mobile money vs. Actual uses of mobile money post adoption
  43. 43. Relationship between mobile money transactions, income and level of solar energy access The graphs show total transaction value (TXVA) by level of solar energy access and income quartiles in year 2015 and 2016 The above graph shows that mobile money transactions increase with the level of solar energy access. The graph on the right splits respondents by income quartiles and year, thereby providing additional detail about the relationship between mobile money transactions, energy access levels, and income. Note: Graphs have been zoomed to optimize graphing area. Some outliers have been excluded. Some respondents have TXVA exceeding $60,000.
  44. 44. Relationship between mobile money transactions, income, and level of solar energy access cont. Graphs show Median Total transaction value (TXVA) by level of solar energy access and income quartiles in year 2015 and 2016

×