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Solar panel for home use rural Malawi

Off-Grid Solar Power Solutions

Photo by Shutterstock

Off-Grid Solar Power Solutions

Compare IOA
Country
Eswatini
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in ROI)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
275,000 households do not have financial or physical access to electricity
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Climate Action (SDG 13) Good health and well-being (SDG 3) Responsible Consumption and Production (SDG 12)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11)

Business Model Description

Invest in off-grid solar systems, including setting-up and manufacturing mini-grids and solar home systems (SHS) as standalone solutions for basic lighting, heating and appliance services for communities who lack access or cannot afford the national electricity supply.

Expected Impact

Increase access to electricity for households and industries in remote regions with cost-effective solutions and high reliability.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Eswatini
Region
  • Eswatini: Shiselweni
  • Eswatini: Lubombo
  • Eswatini: Manzini
  • Eswatini: Hhohho
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Eswatini imports 80% of its energy from South Africa and Mozambique (22). The high dependency on energy imports contributes to the government’s fiscal deficit and increases Eswatini’s exposure to energy supply risks, namely supply security and price shocks, highlighting the need for increased domestic energy production capacity (1).

Policy priority
The Kingdom of Eswatini Energy Masterplan 2034 aims to reduce dependency on energy imports by advancing domestic energy production through the utilization of available renewable energy resources, such as biomass and solar, and to ensure sustainability, efficiency, accessibility and affordability of all energy sources (1).

Gender inequalities and marginalization issues
Although national electricity coverage in Eswatini is 87%, several rural inhabitants, especially smallholder farmers and small business owners, do not have access to electricity or cannot afford high tariffs (2, 3, 4).

Investment opportunities introduction
Eswatini is well endowed with renewable energy resources, which incentivizes investments in renewable resources and alternative energy, including scaling-up renewable energy power plants, especially solar PV and biomass, that will provide low-cost energy (1, 4).

Key bottlenecks introduction
Limited private participation in energy generation, lack of regulatory and fiscal incentives for investors, high infrastructure costs and lack of adequate institutional and private sector capacity to plan, prepare and implement viable renewable energy projects prevent uptake of renewable energy (2, 6).

Sub Sector

Alternative Energy

Development need
Eswatini's domestic energy supply is mostly derived from hydropower and sugar cane-based cogeneration, making the supply vulnerable to external factors such as droughts. Energy demand is expecting an 18.76% increase by 2034, placing further pressure to pursue alternative energy sources such as renewables (1).

Policy priority
Eswatini's National Energy Policy (5) and Nationally Determined Contributors (NDC) (9) commit to increase the share of renewables to 50% of the national energy mix and to increase household access to clean and affordable energy to 100% by 2030.

Gender inequalities and marginalization issues
Although the access rate to electricity is relatively high at 87%, rural electrification rate stands at 83% compared to urban regions with above 95% (4). 90% of the total rural energy for cooking and heating in Eswatini is primarily collected and used by women (5, 9).

Investment opportunities introduction
Substantial investment opportunities exist for solar PV and bagasse generation as seen in electricity authority's intention to roll out three more 15 MW solar projects and a 40 MW biomass plant (10).

Key bottlenecks introduction
Limited financial resources of the primary utility company to implement solutions constrains alternative energy production. Additionally, the current tariff system is not based on cost of service delivery and electricity access is constrained by high tariffs (7).

Industry

Solar Technology and Project Developers

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Off-Grid Solar Power Solutions

Business Model

Invest in off-grid solar systems, including setting-up and manufacturing mini-grids and solar home systems (SHS) as standalone solutions for basic lighting, heating and appliance services for communities who lack access or cannot afford the national electricity supply.

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

275,000 households do not have financial or physical access to electricity

275,000 households in Eswatini are unable to afford basic electricity packages and use biomass for cooking and lighting despite having access to the national electricity grid (15).

82% of Eswatini's adult population can potentially be served by clean energy alternatives, either for broad energy requirements or for cooking specifically (15).

Finmark Trust estimated that 45% of the population is unable to afford a standard consumption package of 365 kWh per year at the current tariff of USD 0.10 per kWh (15).

Indicative Return

ROI
Describes an expected return from the IOA investment over its lifetime.

20% - 25%

According to a solar energy company operational in Eswatini, solar water heating suppliers can generate ROIs of 20-25% due to high demand in the market (29).

According to SUNBADGER, solar PV home systems have a ROI of 20% (21).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

If properly installed and well maintained, solar water heating systems may have a payback period of about five years (with a 10% discount rate) within a 20-year lifetime (16).

For the end consumer, solar PV home systems have a payback period of 7-10 years from the first payment, according to SUNBADGER (21).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

< USD 500,000

Market Risks & Scale Obstacles

Capital - Limited Investor Interest

The business model for solar home systems (SHS) in rural areas has brought little uptake by private investors in Eswatini due to affordability concerns by end-users (15).

Capital - Requires Subsidy

Solar home systems (SHS) for rural households require some form of financial support system for end-users or increased access to credit to make it affordable for households in need (15), hence limiting the market size potential for investors.

Market - Highly Regulated

Eswatini is yet to establish a regulatory framework for off-grid solar energy solutions; the Energy Regulatory Authority is currently formulating a licensing scheme, which will allow licensing for up to 1 MW for own use consumers (17).
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

The majority of Eswatini's energy is imported from South Africa that relies on fossil fuels for its energy production, which contributes to the country's indirect carbon footprint (9) and highlights the need for increased domestic production capacity.

The growing population in Eswatini, coupled with the rising demand for fuelwood and poor management of indigenous forests, has resulted in biomass resources being depleted in certain areas of the country (9, requiring alternative sources for energy generation.

Eswatini lacks critical water, sanitation and hygiene infrastructure in hospitals and education facilities, with 9 out of 10 clinics in the country lacking access to hot water for operations and cleaning instruments (25).

Gender & Marginalisation

275,000 households (23% of population) in rural areas of Eswatini are not connected to the national grid and have no access to energy because it is more expensive than biomass alternatives such as firewood (15).

For the rural poor, grid connection costs exceed present consumption needs. These costs are an often insurmountable barrier for those who are energy poor, regardless of whether the electricity provided is from renewable or fossil fuel generated sources (9).

Around 90% of Eswatini's rural population relies on fuel from wood for heating and cooking, which contributes significantly to GHG emissions and is detrimental to human health, solidifying the need for clean and affordable energy for low-income households (5, 9).

Expected Development Outcome

Off-grid solar power solutions reduce the overall energy demand from the grid of households and businesses, which results in lower energy import needs (15).

Increased access to solar powered clean energy sources through off-grid systems reduces reliance on wood, fuel and charcoal for cooking and heating, lowering emissions and preserving ecosystems and land in Eswatini (9).

Gender & Marginalisation

Access to off-grid solar power solutions addresses challenges associated with health, hardships and inconveniences resulting from the use of solid fuels for cooking and heating at household level, particularly in rural areas (9).

Off-grid solar power solutions present a more affordable alternative to increase rural electrification compared to grid infrastructure extension and increase access to energy in the most remote areas.

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.2.1 Renewable energy share in the total final energy consumption

Current Value

Eswatini has 76% national electricity coverage (84% in urban and 55% in rural areas) (3).

68% of domestic energy production is from renewables, but when including energy imports / total energy consumption, only 7,7% is derived from renewable resources (16, 23, 7).

Target Value

Achieve 100% access to clean energy at household level by 2030 (3).

Achieve 50% share of renewables in total energy consumption by 2030 (1, 5, 9).

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

Eswatini’s net GHG emissions in 2018 were estimated at 3,240.10 Gg CO2e (9).

Target Value

Achieve a 9.08% (665,800 tons) reduction in total GHG emissions in 2030 compared to a baseline scenario (9).

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.4.1 Mortality rate attributed to cardiovascular disease, cancer, diabetes or chronic respiratory disease

Current Value

Approximately 161,913 households are affected by household air pollution and possible respiratory-related health issues (9).

Target Value

N/A

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.a.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)

Current Value

147 watts per capita (2019) (23).

Target Value

Achieve 50% share of renewables in total energy consumption by 2030 (1, 5, 9).

Secondary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

Directly impacted stakeholders

People

Communities not served by the national grid obtain access to reliable electricity, and the general population enjoys a cost-effective energy alternative.

Gender inequality and/or marginalization

Rural and vulnerable households enjoy greater electrification for consumptive and productive purposes.

Planet

The environment benefits from increased use of clean energy sources, which reduces the overall GHG emissions of the energy sector and the dependency on coal-based energy imports.

Corporates

Businesses obtain electricity supply for productive purposes, equipment providers for modular solar energy and heating systems capitalize on increasing demand for off-grid solutions. Institutions lacking access to water sanitation and hygiene infrastructure, including schools and hospitals benefit from access to hot water through modular solar heating.

Public sector

The government benefits from the enhanced electrification, which leads to improved socio-economic conditions of communities previously excluded from a stable energy supply. Public institutions, including hospitals and schools, that lack access to adequate water, sanitation and hygiene infrastructure benefit from access to hot water.

Indirectly impacted stakeholders

Gender inequality and/or marginalization

Rural and vulnerable households resort less to harmful cooking and heating practices thanks to clean and healthy energy supplies.

The environment benefits from reduced deforestation resulting from excessive use of wood for energy through increased access to clean and affordable energy.

Corporates

Businesses that purchase their own solar systems benefit over the long term from returns on investments and self-sufficiency; solar power solution distributors and maintenance providers enjoy more demand.

Outcome Risks

Failure to maintain and recycle waste associated with off-grid solar power infrastructure installations may produce environmental externalities.

Impact Risks

High installation and input costs may discourage low-income and rural households from utilizing off-grid solar power solutions, which may limit the expected impact.

If energy costs associated with off-grid solar power solutions cannot compete with the tariffs of the national grid, with its ongoing development efforts and production capacity increases, consumers may resort to grid connections and the impact may be limited.

Weather conditions may reduce the energy generation capacity of off-grid solutions, which may necessitate additional grid connectivity and hence limit the impact.

Material risks associated with accidents, natural catastrophes, or theft of off-grid solar equipment may prevent delivery of expected impact (18).

Impact Classification

C—Contribute to Solutions

What

Off-grid solar power solutions increase access to electricity in remote regions with cost-effective tariffs and high reliability.

Who

Households, commercial electricity users such as health care and educational institutions, especially those not served by the national grid, benefit from off-grid solar power solutions.

Risk

While the off-grid solar power solution model is proven, affordability for low-income households, tariff levels and required inputs such as weather conditions require consideration.

How Much

Off-grid solar power solutions contribute to the goal of achieving 100% access to clean energy for households by 2030 (3) as an estimated 45% of the population is unable to afford the standard electricity tariff (15).

Impact Thesis

Increase access to electricity for households and industries in remote regions with cost-effective solutions and high reliability.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

National Energy Policy, 2018: Emphasizes the need for implementing energy efficiency and conservation measures that can be applied to reduce energy consumption in all economic sectors through solar water heaters and renewable energy mini-grid and off-grid technologies (5).

Kingdom of Eswatini Energy Masterplan 2034: Highlights the importance of off-grid stand-alone solar systems for the electrification of rural and remote areas and doubling the share of renewables in the primary energy mix (1).

Independent Power Producers (IPP) Policy, 2105: Aims to increase the utilization of local renewable energy resources, including the use of off- and mini grid solar systems, to enhance rural electrification and the role of the private sector in addressing domestic energy shortages (19).

Financial Environment

Financial incentives: The S10 Lifeline Tariff cushions lower usage customers against high prices; it is an attempt to increase energy security and advance poverty alleviation (27).

Financial incentives: Eswatini Energy Regulatory Authority (ESERA) provides a subsidy frameworks for the benefit of the electricity supply industry of Eswatini, protects households in need of support and enhances electricity access at affordable tariffs (28).

Other incentives: Established by the Government, the Rural Access Fund and Rural Electrification Programme has been capitalized since April 2017 through a levy on electricity tariffs; it has rolled out the installation of solar home systems and solar water heaters in schools and rural and remote areas (15, 16).

Regulatory Environment

Eswatini Electricity Act, 2007: Provides a clear impetus for the deployment of solar PV systems and mini-grids for isolated settlements (15).

Electricity Licensing Bylaws, 2016: Exempts self-generators of less than 100 kW, off-grid systems and mini-grids from licensing requirements (20).

Grid Connection Code for Renewable Power Plants Connected to the Electricity Transmission System or the Distribution System, 2014: Specifies minimum technical requirements for renewable energy plants wishing to connect to the grid. It applies to PV, concentrating solar power, small hydro, landfill gas, biomass, biogas and wind technologies (20).

Eswatini Energy Regulatory Authority (ESERA): Is working on a framework for the development of off-grid and mini-grid solutions and how the private sector can participate with new regulations expected to be rolled out in 2023 (17).

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Watts Up Solar, SolarXgen, Ecolibri, Solsun, SolarXgen, GoParity, Frazer Solar, Frazium Energy, Solar Energy Life, FINCORP.

Government

Ministry of Natural Resources and Energy, Eswatini Energy Regulatory Authority (ESERA), Eswatini Electricity Company (EEC), Eswatini Investment Promotion Authority (EIPA).

Multilaterals

United Nations Development Programme (UNDP), United Nations Capital Development Fund (UNCDF), Southern Africa Development Community (SADC), Finmark Trust, World Bank Group (WBG). IRENA

Non-Profit

Honnold Foundation, Power for All, ACRA, Rockefeller Foundation.

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Eswatini: Shiselweni

With 66%, Shiselweni is the region with the lowest rate of access to electricity in Eswatini, highlighting the need for rural electrification through decentralized solar power solutions, especially solar home systems (15).
rural

Eswatini: Lubombo

With 75%, Lubombo is the region with the second lowest rate of access to electricity; several farms in Lubombo have installed off-grid solar systems for personal use (15).
semi-urban

Eswatini: Manzini

Manzini has several businesses and facilities that can make use of cheaper energy tariffs through off- and mini-grid solutions. 21% of region's population lack access to electricity; with La-Mgabhi and Mangcongco sub-regions having the lowest access at 55% and 53%, respectively (15).
semi-urban

Eswatini: Hhohho

Hhohho has several businesses, industries and facilities that can benefit from cheaper energy tariffs through off- and mini-grid solutions and 19% of Hhohho's population still lack access to electricity with Ndzingeni and Mbabane West sub-regions having the lowest access at 61% and 59%, respectively (15).
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References

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