analysis of the potential future of the lighting global quality

© 2015 Navigant Consulting, Inc.

ANALYSIS OF THE POTENTIAL FUTURE

OF THE LIGHTING GLOBAL QUALITY

ASSURANCE PROGRAM

Prepared for:

Office of International Affairs,

U.S. Department of Energy and

Global LEAP of the Clean Energy Ministerial

Prepared by: Paul Waide, Shannon Graham, Dexter Gauntlet, and

Rowan Watson

Navigant Consulting, Inc.

Navigant One Market Street | Spear Street Tower, Suite 1200 | San

Francisco, CA 94105

+1 415.356.7100

www.navigantconsulting.com

5th August 2015

Potential Future of the Lighting Global Quality Assurance Program Page i

Table of Contents

Glossary ....................................................................................................................................... iii

Executive Summary .................................................................................................................... 1

1. Introduction ........................................................................................................................ 3

2. Market Analysis ................................................................................................................. 4

2.1 Pico Solar and SHS Forecasts ....................................................................................................................... 4 2.2 Industry Profiles: 2012–2024 ......................................................................................................................... 6

2015–2017 Industry Profile ........................................................................................................................... 6 2018–2024 Industry Profile ........................................................................................................................... 7

3. Costs, Revenue, and Business Model Analysis ........................................................... 10

3.1 Summary of Findings from the GOGLA-Navigant Survey .................................................................... 10 Findings of the Quality Assurance Survey ............................................................................................... 10

3.2 Summary of Functions and Roles Needed to Operate a QA Certification Body ................................. 12 Certification of Products ............................................................................................................................. 12 Maintenance of Test Methods and Quality Standards ........................................................................... 12 Provide Public Information ........................................................................................................................ 13 Assist Manufacturers/Producers ............................................................................................................... 14 In-field Promotion and Market Surveillance Activities .......................................................................... 14 Fundraising to Support Certification Body .............................................................................................. 14 Laboratory Accreditation ............................................................................................................................ 15 Enforcement .................................................................................................................................................. 15 Managing Legal Risk ................................................................................................................................... 15

3.3 Estimated Future Costs of Operating a QA Certification Body ............................................................. 15 3.4 Implications of the Stakeholder Survey Findings on the Value of QA ................................................. 19 3.5 Business Models and Prospective Revenue Analysis .............................................................................. 22

4. SWOT Analysis ................................................................................................................ 25

Concept 1: Stay the Course (Third-party led, product certification) .................................................... 25 Concept 2: Modify the Course (Concept 1 without market surveillance) ............................................ 25 Concept 3: Alternative Course (Industry-led, product self-certification) ............................................ 25 Concept 4: New Course (Hybrid leadership, supplier certification) .................................................... 26

5. Conclusions and Recommendations ............................................................................. 32

Appendix A: Scope of Work .............................................................................................. 34

A1. Background ................................................................................................................................................... 34

Potential Future of the Lighting Global Quality Assurance Program Page ii


A2. Scope of Work .............................................................................................................................................. 37 1. Market Research: Future Sales and Industry Profile ................................................................... 37 2. Revenue Analysis: Potential for Revenue Generation to Support QA Activities .................... 38 3. SWOT Analysis: Four QA Concepts .............................................................................................. 39 4. Findings and Recommendations .................................................................................................... 40

Appendix B: Market Forecasts .......................................................................................... 41

B1. Introduction .................................................................................................................................................. 41 B2. Methodology ................................................................................................................................................ 41 B3. Market Definition ......................................................................................................................................... 41 B4. Pico Solar and SHS Forecasts ..................................................................................................................... 42 B5. Pico Solar ....................................................................................................................................................... 43

Africa ............................................................................................................................................................. 44 Asia Pacific .................................................................................................................................................... 46 Latin America ............................................................................................................................................... 47 Middle East ................................................................................................................................................... 48

B6. Solar Home System Forecast ...................................................................................................................... 48 Asia Pacific .................................................................................................................................................... 48 Africa ............................................................................................................................................................. 50 Latin America ............................................................................................................................................... 51 Middle East ................................................................................................................................................... 52

Appendix C: QA Stakeholder Survey .............................................................................. 53

C1. Survey Responses ........................................................................................................................................ 53 Questionnaire - About You and Your Organization ............................................................................... 53 Questionnaire on Quality Assurance ........................................................................................................ 56

End notes: The Four Concepts for a QA Organization Discussed at the GOGLA QA

Meeting Held in Cologne, 2014 ............................................................................................... 70


Potential Future of the Lighting Global Quality Assurance Program Page iii

Glossary

Certification Certification is the process through which an

independent organization checks whether a

certain product or service has been tested, verifies

its declared performance characteristics and

certifies that the declared characteristics are

correct and/or that the product or service is

proven to meet specified minimum requirements

Certification Body An organization that carries out certification

EOI Expression of Interest

FTE Full time equivalent

FTS Full time support

Global LEAP Global Lighting and Energy Access Partnership

(Global LEAP) of the Clean Energy Ministerial,

http://www.cleanenergyministerial.org/Our-

Work/Initiatives/Energy-Access

GOGLA Global Off-Grid Lighting Association

IEC International Electrotechnical Commission

IFC International Finance Corporation

ILAC International Laboratory Accreditation

Cooperation

ISO International Standards Organization

LG Lighting Global. The World Bank Group’s

Lighting Global program,

https://www.lightingglobal.org/

Lighting Africa The World Bank Group’s Lighting Africa

program, https://www.lightingafrica.org/

Lighting Asia The World Bank Group’s Lighting Asia program,

http://www.lightingasia.org/

LOE Level of Effort

MFI Microfinance Institution

NGO Non-governmental organization

PAYG Pay-As-You-Go1

1 The Pay-As-You-Go business model typically uses machine-to-machine communications technology enabled by

cellular networks to enable customers to pay for lighting service credits from an off-grid solar lighting product

through their mobile money accounts. Customers typically provide an upfront fee or deposit and then make

payments for lighting service at a rate that is less than what they would typically spend on kerosene – while

receiving significantly higher quality lighting service.

http://www.cleanenergyministerial.org/Our-Work/Initiatives/Energy-Access

http://www.cleanenergyministerial.org/Our-Work/Initiatives/Energy-Access

https://www.lightingglobal.org/

https://www.lightingafrica.org/

http://www.lightingasia.org/

Potential Future of the Lighting Global Quality Assurance Program Page iv

Pico solar Solar-powered products drawing ≤10W of power

- These are entry-level lighting products that cost

between $10 and $40 and include small solar

modules (generally <10W) with white LEDs.

These products are commonly referred to as

“solar lanterns” and frequently also include

additional capabilities such as mobile phone

charging.

QA Quality Assurance

SHS Solar Home System. A typical SHS includes a

solar panel (10W-200W), a storage battery, multi-

light source applications with mobile phone

charging outlets), and often includes DC-

Powered appliances such as a radio. The entire

system typically costs between $100-$500

SHS kits Solar Home System kits: SHS kits are solar home

systems in which all components and parts are

included in a single package. Plug-and-play SHS

kits, which are one type of SHS kit, are designed

so that the electrical connections required during

system installation can be made without the use

of tools.

SWOT Strengths, Weaknesses, Opportunities, Threats – a

type of analytical framework

Potential Future of the Lighting Global Quality Assurance Program Page 1

Executive Summary

This report presents the findings of an investigation into the factors and issues affecting the likely

viability of prospective successor organizations to the current Lighting Global (LG) Quality Assurance

(QA) organization. The analysis presented is intended to provide useful information to prospective

applicants to the IFC’s request for expressions of interest regarding the Lighting Global Off-Grid

Lighting Third-Party Certification Body. It was conducted by Navigant Consulting with support from

the Global Off-Grid Lighting Association and funded by U.S. Department of Energy under the Clean

Energy Ministerial’s Global LEAP program.

Specifically the report includes: a market forecast for solar off-grid products (the sector, comprising pico

solar and solar home systems (SHS)) to 2024, an analysis of the market structure and factors that affect it,

an analysis of the prospective functions and costs of a global off-grid QA Certification Body, an analysis

of the prospective revenue models that could be used to recover operating costs, the findings of an

extensive stakeholder survey of some 38 organizations active in the solar lantern (pico solar) and solar

home systems (SHS) domains, the assessment of four potential organizational models for an off-grid QA

Certification Body via a strengths, opportunities, weaknesses, and threats (SWOT) analysis, and the

derivation of conclusions and associated recommendations.

The annual, global market revenue for pico solar and for SHS products combined is projected to grow

from $538 million in 2014 to $2.1 billion in 2024. The revenue from SHSs makes the greater proportion of

this in 2014, but pico solar revenues are growing faster and are expected to attain parity by 2024. Sales in

Africa account for about three-quarters of the global pico solar market, which is the traditional focus of

the Lighting Global QA program, while Asia, which notably includes Bangladesh, accounts for

approximately 80% of the SHS market. These two regions are expected to continue to dominate the

global market for off-grid solar products.

Nine separate functions were identified for the QA Certification Body, of which six were a principal

focus. The analysis of functions found that not all of these need to be administered by the same agency,

nor do they require the same competences or scope. As such, there is potential for prospective applicants

to manage part of these functions while other applicants would manage others. The cost analysis

concluded that the expected operating costs of a Certification Body fulfilling all these function would

rise from $1.4 million in 2016 to $2.2 million in 2018 before stabilizing at approximately $1.8 million from

2021 onward. The revenue analysis concluded that a revenue model based purely on fees collected each

time a product is certified would be unsustainable and that a blend of product certification fees, annual

subscription whose fees are based on annual revenue of the organization in that sector (i.e. which take

into account the ability to pay and the value of QA certification to the applicant), and third-party donor

funding would be necessary until about 2022–2024, after which the industry should be sufficiently

established to be able to pay the necessary sums. Thus the ability of a successor organization to raise

funds in the transition period will be critical to success.

The stakeholder survey found there is:

Strong support for the continuation of a QA certification program


Interest in extending the focus to cover SHS kits and counteracting counterfeit/imitation

products

An average estimated suppression in market growth of 28% over the next 5 years if an effective

solar off-grid product QA program is not maintained

Strong preference to continue with the current QA initial product certification and market

surveillance model

Strong preference for governance of a post-LG QA program to be via a public-private

partnership

Mixed feelings about the best revenue model to be applied to fund the QA Certification Body

Lack of consensus on willingness to fund a program

However, analysis of the stakeholder survey and Navigant market projections indicate an estimated

market value from an effective successor QA certification program of equivalent to more than 48 times

the cost to operate it by 2020. Thus there is an overwhelming business case for the continuation and

funding of such a program, and it is clearly in the sector’s own interest to support such an initiative.

Effectively communicating this business case to key stakeholders that are in a position to help sustain the

QA effort will therefore need to be a priority of the LG QA Certification Body successor organization.

For the successful continuation and evolution of the current program it is concluded that:

Analysis of prospective Certification Body revenue models shows that a model based solely on

product certification fees would be insufficient and unstable. Therefore, a blend of these—

organization revenue-based dues and donor funding—will be needed until the industry

becomes sufficiently developed for it to become viable for the QA program to attain full cost

recovery from industry in about 2021–2024.

Identification of a strong organization or coalition of actors with the right qualifications and

motivation is essential.

The organization/actors will require strong fundraising capacity.

A QA Certification Body that is both equipped and willing to address legal liability issues is

necessary.

Ensuring the legitimacy of the organization in the eyes of key stakeholders, including industry,

government, investors, etc., will require a broad-based and credible governance structure for

management of the funding and legal liability challenges to be successful.

IFC funding cannot be guaranteed beyond 2 years’ time, so decisions on how to progress the QA

program need to be taken rapidly to have a reasonable prospect of a successful transition.

Each of these aspects will need to be addressed for the QA program to continue and thrive.

Given the range of competences and scope of functions required, it is quite likely that the most viable

outcome from the expression of interest (EOI) will be the assembly of a consortium of partners that

combines the capabilities of more than one body to provide the required services.


1. Introduction

The World Bank Group’s Lighting Global initiative has been managing a quality assurance (QA)

program for off-grid pico solar products since 2009, and it is the process of expanding its quality

assurance coverage to include plug-and-play solar home system (SHS) kits. In approximately 2 years’

time, World Bank Group funding of QA activities in this sector is expected to end, and therefore there is

a need to assess the importance of continuing to provide independent QA for the off-grid solar market

and to examine options for a transition to a new platform. Specifically, the World Bank Group’s Lighting

Global program and the U.S. Department of Energy’s Global LEAP initiative, in consultation with the

Global Off-Grid Lighting Association (GOGLA) and other partners, are looking to establish an

independent and self-sustaining international QA program for solar-powered off-grid lighting and

energy systems and associated appliances. This program will build upon the existing QA programmatic

activity for solar-powered lighting and energy systems developed through the Lighting Global program

and its predecessor, the Lighting Africa program, in partnership with Global LEAP and other

organizations. Because programmatic support from the World Bank Group will only be available for a

few more years, there is a need to quickly transition these QA activities to a self-sufficient platform.

To help support this process, the U.S. Department of Energy’s Global LEAP initiative has engaged

Navigant Consulting to conduct research and analysis of key issues pertaining to the potential future of

the Lighting Global QA program, the results of which are presented in this report. This work has been

conducted in close cooperation with GOGLA, the International Finance Corporation’s (IFC’s) Lighting

Global program, and the Schatz Solar Energy Center at Humboldt State University, which currently

implements the Lighting Global QA program on behalf of the World Bank Group. The findings of this

work are intended to help assist potential applicant organizations to the IFC’s call for expressions of

interest (EOI) for the Lighting Global Off-Grid Lighting Third-Party Certification Body to understand:

the market, the value of QA, the various QA Certification Body roles, stakeholder perceptions,

prospective costs and revenues, prospective collaborations with other stakeholders, and the merits and

demerits of different QA Certification Body organizational options. For a full understanding of the

issues, this report should be read in conjunction with the following documents:

Request for Expressions of Interest for the Lighting Global Off-Grid Lighting Third-Party Certification

Body

Lighting Global Quality Assurance Framework Past, Present, and Future Support for the Off-Grid

Energy Market

The full scope of work Navigant was asked to address is presented in Appendix A.


2. Market Analysis

This analysis aims to provide the Lighting Global program with a reasonable forecast for both the pico

solar and SHS markets over the next 10 years. The forecast is to be used to assess the ability of the key

value chain players to support a global quality program. Thus the focus of the data gathering and

reporting is on the number of products sold globally, the revenue, key regions, and the overall industry

structure. There are two central research questions this section of the report is intended to address:

What are the sales projections for 3 and 8 years into the future (by product type – including

lanterns and SHS kits)?

What is the industry profile today and what is it likely to be in 3 and 8 years’ time, in terms of

number of companies, composition (concentration or fragmentation), and types of key market

players (i.e., affiliated with larger global company or standalone)?

Given the anticipated industry profile, the analysis also considers in section 3 what are the implications

for a) need and role of QA and b) the economic feasibility of providing QA services?

The analysis is organized by presenting the overall market for pico and SHSs, including SHS kits. Full

details including of the methodology used and with greater differentiation by market and producer are

presented in Appendix B. In addition, an industry profile of the time periods 2015–2017 and 2018–2024 is

presented.

2.1 Pico Solar and SHS Forecasts

Combined global annual unit sales of pico solar lighting and SHSs are forecast to grow from 8.2 million

products in 2014 to 64.3 million in 2024. Annual revenue from the sale of these products is expected to

increase from $538 million to $2.1 billion over the same timeframe. Note, within the SHS segment there is

an important split between SHS plug-and-play kits and the wider SHS market. The wider SHS market is

currently much more established and represents the majority of sales, but the share taken by SHS kits is

growing more rapidly, largely because their installation costs are substantially lower. Over the whole

pico solar and SHS segments, the Asia Pacific region is expected to remain the leading market in terms of

combined sales revenue through 2018. In 2019, Africa is expected to surpass Asia Pacific in annual

revenue and remain the largest market through 2024.

Asia Pacific is forecast to grow from an annual pico solar and SHS market of $376.5 million in 2014 to

$992.3 million in 2024, while the market in Africa is expected to grow from $148.6 million to $1.1 billion.

After the two key regional markets, there is a significant drop in unit sales and revenue. Latin America is

expected to be the third largest market in 2014 with $7.0 million in revenue, growing to $13.8 million in

2024. The Middle East is expected to grow from $3.5 million in revenue to $15.2 million during the same

timeframe.


Chart 2.1 Annual Pico Solar and Solar Home System Unit Sales and Revenue by Region,

World Markets: 2014-2024

(Source: Navigant Research)

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

AfricaMiddle EastLatin AmericaAsia PacificGlobal RevenueAsia Pacific RevenueAfrica Revenue

Un

it S

ales

($ R

eve

nu

e)


Chart 2.2 Annual Pico Solar and Solar Home System Revenue by Region and Product Type, World

Markets: 2014-2024


2.2 Industry Profiles: 2012–2024

The following sections provide off-grid lighting industry profiles for the time periods of 2015–2017 and

2018–2024. The profiles are intended to convey the overall trends that distinguish the time periods—but

in reality, evidence of many of these trends are visible throughout both time periods. Trends by market

player, industry revenue and percentage of QA product in the market from pre-2012 through 2024 are

summarized in Table 0.1.

2015–2017 Industry Profile

With distributors in dozens of countries and millions of units sold each year, during the 2015–2017 time

period, the off-grid solar lighting industry accelerates its transition from a humanitarian aspiration to

significant market opportunity. While off-grid solar lighting market drivers still include political and

humanitarian aspects, technological advancement and business model innovation continue to gain the

attention of public and private investors that result in the emergence of platform companies among both

pico and SHS product providers. These platform companies, including d.light, Greenlight Planet, M-

KOPA, and others, will continue to scale up operations, seek out additional investment, and aggressively

expand to new markets. With initial investments and strategic partnerships made by industry leaders,

including Schneider Electric, Panasonic, Philips, SolarCity and others in the 2010–2014 time period, it is

expected that several new multinational companies will enter the marketplace either through offering

their own products, acquisitions, or joint ventures in the 2015–2017 time period. While it is estimated

that the top 10 companies in the SHS market accounted for approximately 60% of annual sales at the end

of 2014 and even more for the pico solar segment, the top 10 companies are likely to account for as much

as 75% of the market by the end of 2017—since new entrants will not have scaled up fast enough by this

time to gain market share. By the end of this period, all platform companies will have numerous pay-as-

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Pico - Asia Pacific

Pico - Latin America

Pico - Middle East

Pico - Africa

SHS - Asia Pacific

SHS - Latin America

SHS - Middle East

SHS AfricaRev

enu

e ($

)

SHS - Asia Pacific

Pico - Africa

Pico - Asia Pacific

SHS - Africa


you-go (PAYG) products with a variety of payment options tailored for each market. Flexibility in

payment options will increasingly be a key differentiating factor for a more competitive PAYG

marketplace. For example, in 2014, approximately 20% of d.light’s sales have stemmed from PAYG

products, but it is possible that by the end of 2017, PAYG products could represent close to 50% of

annual unit sales. The total number of pico and SHS companies actively operating in the space is

estimated to be in the range of 60–75 during this time, with a roughly even split between pico solar and

SHS providers; although, many companies already provide both product types or are in the process of

doing so.

Need for QA: The need for QA during this time period is significant because the market is still in

transition. In order for additional investments to be made, leading companies in the 2014–2017 time

period will need to execute on ambitious sales targets. While the momentum has definitely shifted

toward quality-assured products, it is risky for the entire market to experience any reduction in QA after

it has come this far.

2018–2024 Industry Profile

During the 2018-2024 time period, it is expected that pico solar and SHSs will have become ubiquitous

with significant sales volumes in more than 100 countries. Annual sales revenue for pico solar systems is

expected to reach $452 million, representing 300% growth compared to 2014. Annual sales revenue for

SHSs is expected to reach $648 million, representing 52% growth compared to 2014. By 2024, both of

those totals are expected to have roughly doubled to $860 million and $1.3 billion in annual revenue,

respectively. It is anticipated that with sufficient investment during the 2015–2017 time period, today’s

relatively new entrants, such as Off-Grid Electric, WakaWaka, BBOXX, and others, will successfully scale

up operations to eventually be able to gain market share and be leaders in new markets during the 2018–

2024 time period. As a result, the top 10 companies are expected to reduce market share from as high as

75% in 2017, back down to 55%–60% in 2024. By this time, PAYG systems are expected to represent more

than 90% of all system sales. The total number of pico solar and SHS companies actively operating in the

space is estimated to be in the range of 50-60 during this time, with roughly even split between pico solar

and SHS providers. During this time period it is also anticipated that telecom companies will begin to

offer their own pico solar and SHS products either directly or through a joint venture.

Need for QA: During the 2018–2024 time period, the threat of counterfeit and non-QA products gaining

market share in mature markets such as East Africa and South Asia remains a serious challenge,

especially as counterfeiting tends to increase as market value increases. Furthermore, with products now

available in as many as 100 countries, the need for QA in relatively new markets will be important to

avoid market spoilage in those regions.


Table 0.1 Off-Grid Solar Lighting Industry Profile Summary Tables: 2012-2024

Pre-2012 2012-2014 2015-17 2018-2024

Market Size

Annual

Market Size:

Pico Solar

N/A

$100 -$150 million $200 -$400 million $600 -$900 million

Annual

Market Size:

SHS

N/A

$400 -$500 million $700 million - $1

billion

$900 million – $1.3

billion

QA Product

Percentage

5%-40% 60% 70%-75% 80%-90%

Geography

Regional

Market

Expansion

India, Bangladesh,

Kenya, Nepal are

leading markets

Further scale-up in

South Asia,

expansion beyond

Kenya in East Africa

Growth in West and

Central Africa;

Middle East; Latin

America

Activity in 100

countries

Role of Key Stakeholders

Government Provides subsidies;

Bangladesh,

Morocco, India,

Brazil

Continues to provide

subsidies; Some

governments

announce kerosene

phase-out or solar

lighting deployment

targets

Phase-out of solar

lighting subsidies in

high-penetration

markets;

establishment of

subsidies in new

markets

Growth of kerosene

phase-out and off-

grid solar

deployment goals;

significant reduction

in kerosene subsidies

Non-

Governmental

Organizations

(NGOs)

Distribute free

lighting products

Transition to market-

based/social

entrepreneurship

models

Consolidation leads

to growth in market

share for leading

social enterprises;

business models

continue to be

refined

Nearly all solar

lighting products are

sold; very few NGOs

distributing for free;

lighting as a service

model is ubiquitous


Pre-2012 2012-2014 2015-17 2018-2024

Microfinance

Institution

(MFIs)

Experiment with

microcredit for SHSs,

mostly in Bangladesh,

India

Expand lending to

solar entrepreneurs

Expand geographic

activity, scaling up in

Africa

Expand financing to

appliances; remain

active in lowest

income brackets

Investors Development banks

(loans and grants),

some foundations

(mostly grants)

Development banks,

foundations, impact

investors, bilateral

donors provide seed

money for social

enterprises (USAID)

Public and private

capital continues to

expand by ~30%-50%

per year; PAYG

companies receive

growing share of

investment

Private investment

expands; cost of

capital is reduced

Corporates Not Active Strategic investments

in market leaders as

investors look to test

the water

Successful scale-up of

market leaders

attracts further

investment/strategic

partnerships from

large lighting,

consumer electronic,

appliance companies;

telecom companies

also more

aggressively enter the

marketplace

Off-grid appliance

market grows

rapidly; telecom

companies become

major players in

lighting market



3. Costs, Revenue, and Business Model Analysis

This section provides potential applicants to manage the QA Certification Body with information needed

to assess likely costs, revenues and business models expected to occur during administration of the

program. It presents analysis of these elements but begins with a summary of the findings from the

GOGLA-Navigant stakeholder survey conducted in the spring of 2015.

3.1 Summary of Findings from the GOGLA-Navigant Survey

The Global Lighting and Energy Access Partnership (Global LEAP) provided support for an analysis

conducted by Navigant Consulting in collaboration with Lighting Global and GOGLA to survey

organizations active in the off-grid solar lanterns and SHS kit fields. Some 38 organizations active in the

off-grid solar power product field completed the survey in the period from March 2015 to May 2015. The

goal of the survey was to determine the views of key stakeholders with respect to the importance of QA

in the sector and the future evolution of the World Bank Group’s Lighting Global Quality Assurance

program. Navigant further incorporated some of the findings from this survey with respect to expected

market growth, with and without an effective QA program in place, into their own market analysis to

estimate the expected value of QA to the development of the off-grid solar products market. This section

presents a summary of the findings and analysis.

Findings of the Quality Assurance Survey

The full survey questions and results are presented in Appendix C, while a summary of findings is

presented below.

Composition of the surveyed parties

The survey participants were comprised of:

19 manufacturers and 2 others that also manufacture as a secondary business activity

5 distributors (noting 6 of the manufacturers are also distributors and 3 distributors are also

foundations or NGOs)

5 investors

3 NGOs/foundations (noting 3 other distributors are also NGOs)

6 other types of organizations

Of these organizations, 30 were directly involved in solar lanterns, 31 in SHS kits, and between 13 and 15

were involved in any of: large SHS kits, off-grid solar system components, appliances, and other off-grid

services and products. Direct sale and sales under a bulk purchase agreement were the most common

routes for delivering products to market, followed by PAYG /energy as service models and others. Some

83% of the commercially active respondents had annual revenue for off-grid products and services of up

to $15 million per year, while 17% had revenue of over $15 million per year.

The importance and value of QA

There is a strong preference among most procurers or investors in off-grid solar products for

products to be QA certified under the IFC’s Lighting Global (LG) program

Most producers recognize this and seek to have their products QA certified under LG

The preference is more pronounced for solar lanterns but is still appreciable for SHS kits, as well


Low-quality products are seen to be a significant problem for both solar lanterns and SHS kits,

but are a somewhat bigger problem for lanterns

Counterfeit products are also seen to be a significant problem for both solar lanterns and SHS

kits, but are a somewhat bigger problem for lanterns

The strength of concern regarding counterfeiting is not as widely felt as concern regarding

product quality; nonetheless, it is a major concern for market leaders and will likely to be a

growing issue for others as the markets mature

Having an effective product QA program is seen to be a highly significant element in supporting

the development of the off-grid solar product market for both lanterns and SHS kits

93% of respondents believe that having an effective QA program will help bolster market

growth for both solar lanterns and SHS kits

On average, respondents estimate revenue growth in the solar product market will be

suppressed by ~29% in 5 years’ time if an effective QA program is not in place (~28% for solar

lanterns and ~29% for SHS kits); most respondents opted for the 20%–40% or 0%–20% ranges for

revenue suppression

The importance and evolution of the LG QA program

There is a strong consensus that the LG QA program is helping to improve product quality

There is less consensus that it is useful for helping to address counterfeiting/imitation

products—40% thought it had ‘little or no use’ and 60% thought it was ‘very useful to somewhat

useful’ with respect to counterfeiting

Many other elements are thought to be useful QA mechanisms aside from a QA certification

program; in particular, warranties, customer education, brand reputation, and affiliation with

trusted intermediaries

Most parties would like to make some changes to the LG QA program, with common

suggestions being shortening the certification time period, extending product range to include

SHS kits and appliances but moving to component testing, adding testing facilities in China,

using commercial labs to save time and costs, and lowering certification costs for revisions or

updates

The strong majority preference is for governance of a post-LG QA program via a public-private

partnership involving commercial entities, public entities, and philanthropic organizations

There is a very strong preference for continuation of the current focus and management of the

LG QA program (i.e., third-party led, product certification, and market surveillance)

Respondents were relatively evenly split between a model for future funding based on a fixed

fee per product, a blend of fixed fee per product, and a sliding fee based on sales volumes/value,

and other factors (seeking fresh donor funding was most commonly mentioned here)

Willingness to pay for QA is more problematic—only 55% stated they were somewhat likely,

likely, or very likely to pay for QA in the future—this dropped to 50% if their preferred

management model was not adopted


3.2 Summary of Functions and Roles Needed to Operate a QA Certification Body

The LG QA certification program currently undertakes the following tasks, and it is therefore likely that

any successor organization would need to undertake all or most of these tasks in order to fulfil the

required QA function:

Certify products

Maintain global quality standards and testing methods

Assist manufacturers/producers

Provide public information

In-field promotion and market surveillance activities

Fundraising to support Certification Body

In addition, the LG QA management organization also supports accreditation of laboratories to be

eligible for quality assurance testing in support of the program, manages enforcement processes, and

manages the legal issues associated with the QA certification program. Each of these roles are now

described in turn.

Certification of Products

Product certification involves:

Processing applications from producers to have a product certified, including issuing certificates

Ensuring product samples are taken at the point of production in accordance with the specified

sampling process and sent to an accredited test laboratory for quality measurement and

assessment

Assessing, based on the test results, of whether the product passes the program’s quality

standards or not

Notifying producers of the status of their application and addressing their queries when a

product does not pass or a test result is questioned

Maintaining a website of certified products and posting the details of certified products on line

and/or removing delisted products from the website in the event that a certified product does

not pass the market surveillance process (see below)

Provision of a certification mark (i.e., provide certified companies with quality mark when

available or other program symbol) and issue use guidelines

Management of testing conflicts and disputes

Related functions are overseeing accreditation of testing laboratories and the implementation of market

check testing (i.e. market surveillance), both of which are discussed below.

Maintenance of Test Methods and Quality Standards

Over recent years, the body managing LG’s QA certification process has been very proactive in

developing product test methods and quality standards in conjunction with key market stakeholders. In

order to help build legitimacy for the test method and quality standards, they have supported the

migration of these elements into an International Electrical Committee (IEC) technical specification,

IEC/TS 62257-9-5:2013(E)2. The IEC is the world’s leading standardization organization concerned with

2 IEC TS 62257-9-5:2013


electrotechnical standards and has national members from 83 countries. The principle function of the

IEC is to develop and maintain international standards for all electrical, electronic, and related

technologies. A decision of whether or not to use an IEC standard is voluntary unless it has been legally

referenced in a specific regulation within a jurisdiction, thus the fact of there being an IEC standard does

not of itself oblige market actors to test their products in accordance with the standard. Nor does the IEC

concern itself with laboratory accreditation (the process of verifying that a laboratory is capable of

testing a product in accordance with a test standard and that it follows appropriate management

procedures) other than to jointly issue with the International Organization for Standardization (ISO)

methodological standards specifying how such accreditation should be carried out (most importantly

standard ISO/IEC 17025:2005). While IEC product testing standards will always specify the test

methodology to be used when testing a product, including which parameters are to be tested and

reported, they do not impose mandatory minimum requirements. They may, however, include non-

binding annexes that specify recommended minimum requirements, and this is the case for IEC TS

62257-9-5, which includes the LG Quality Standards (the LG minimum quality requirements) as an

annex for information.

Each IEC standard or technical specification is developed within a Technical Committee (TC). In the case

of IEC/TS 62257-9-5:2013(E) this is TC 82. Thus a clear role of the Certification Body will be to provide

input to TC82 in order to maintain the current IEC/TS 62257-9-5:2013(E) but also to broaden the scope so

that this, or potentially new IEC standards, are suited to measuring and communicating the quality of

other solar off-grid products such as SHS kits, SHS systems, components, and appliances.

Provide Public Information

Communication of the scheme, i.e. the certification program, results and value, to the public at large and

to specific targeted stakeholders within it is a key role for the Certification Body. This is needed to help

build awareness of the scheme so that market actors become familiar with it, understand its value, and

communicate this through the supply chain. If this is conducted effectively it will help to distinguish

certified products from non-certified products and help inform market actors of the risk associated with

the supply/purchase of products that have not passed through the QA framework. Lighting Global

IEC (description continued): Recommendations for small renewable energy and hybrid systems for rural

electrification - Part 9-5: Integrated system - Selection of standalone lighting kits for rural electrification. IEC/TS

62257-9-5:2013(E) applies to standalone rechargeable electric lighting appliances or kits that can be installed by a

typical user without employing a technician. This technical specification presents a quality assurance framework

that includes product specifications (a framework for interpreting test results), test methods, and standardized

specifications sheets (templates for communicating test results). The intended users of this technical specification

are:

- Market support programs;

- Manufacturers and distributors;

- Bulk procurement programs;

- Trade regulators. The main changes with respect to the first edition are:

- Overall, shifted from narrow focus on the needs of bulk procurement programs to a wider framework for

structuring quality assurance using appropriate methods for a range of stakeholders including governments,

manufacturers, buyers, and others;

- Revised structure of document with modular methods (located in annexes) that are applied using four distinct test

regimes;

- Added a framework for categorizing products based on the arrangement of components.


currently communicates information about product quality to supply chain actors, government officials,

investors, and other interested parties through a website. Lighting Global's affiliated programs—

Lighting Africa, Lighting Asia, and Lighting Pacific—also use consumer awareness campaigns in specific

country markets to deliver information about quality to end users. In the future, additional

communication tools such as a quality label or seal could be used to deliver information to the market.

Assist Manufacturers/Producers

Product manufacturers submitting or considering submitting products for certification will need

assistance in understanding the requirements their products will need to meet, understanding the

certification process, receiving guidance with respect to how their product design and production

methods may need to be amended to comply with the QA requirements, receiving guidance on what

claims they are allowed to make with respect to the program and their products, interpreting product

testing results, and determining how to replicate product testing processes in their own internal labs so

that they can conduct accurate tests on products prior to submitting them for certification. The

Certification Body will therefore need to be able to address such needs.

In-field Promotion and Market Surveillance Activities

The Certification Body will require a strong in-market presence in order to:

Conduct market surveillance such as taking product samples at random from the market place

for QA verification testing (i.e., testing to verify that the certified products as sold in the market

meet the program’s QA requirement – this is also known as market check testing)

Promote the program among bulk buyers, governments, and investors

Engage with end users/last-mile vendors to ensure the scheme meets their needs

Market surveillance via verification testing of product samples sold in the field (i.e., the destination

markets) is an indispensable step to ensure that there is no systemic manipulation of the QA certification

process through the use of doctored samples and also to ensure that manufacturers have not made

changes to products post certification that may lower their quality. To be able to conduct such

surveillance necessitates that the Certification Body should have staff able to take product samples from

the place of sale and thus will require a presence in key regional markets. This presence can also be used

to help promote the QA certification program among key local stakeholders such as governments, bulk

buyers, distributors/retailers, and investors. These stakeholder outreach activities include engaging with

government regulators to encourage them to harmonize their standards with those of the program and

promoting the QA program with supply chain actors, financial institutions, investors, and other relevant

stakeholders. A local market presence can also be used to support important liaison with product end

users and so-called last-mile vendors to gather feedback and ensure that the scheme is being

implemented in a way that is consistent with their needs.

Fundraising to Support Certification Body

As is shown in Sections 3.3 and 3.4 below, it is anticipated that the Certification Body will not be able to

recover its operating costs simply through application of product certification fees and thus will need to

find additional sources of funding. While in the longer term it will need to move to full cost recovery

from industry beneficiaries in the nearer term (i.e., approximately the next 6 years), it is likely to need

additional funding from non-industry parties (third-party donors). IFC is likely to be able to support this

until mid-2017 but thereafter the entities that take on the role of managing the Certification Body will

need to raise third-party funds in order to cover the expected funding gap. This implies that the entities


that aim to manage the program should have a proven ability to raise third-party funding for socially,

developmentally, and environmentally worthwhile activities.

Laboratory Accreditation

Currently the team managing LG’s QA certification process is also responsible for ensuring that test

laboratories used within the program are qualified to test products in accordance with the IEC TS 62257-

9-5 test methodology and meet appropriate quality control requirements. This laboratory accreditation

function could be supplied in the future by national accreditation agencies operating within the ILAC3

framework, but there would need to be a transition period to permit this to happen and in the interim

the process would need to be supported by the Certification Body. Furthermore, it should be noted that

while ILAC requirements will always require laboratories to meet the specifications under ISO/IEC

17025, they do not necessarily require cross testing of products between laboratories to verify that a lab

seeking accreditation will produce the same results as those that are already accredited. Producing

acceptable results within such a round-robin testing program (where all labs in the program verify that

they are producing similar results through testing of the same sample) is a requirement within the

current LG QA program.

Enforcement

Management of the Certification Body will require development and implementation of enforcement

procedures in the event of products failing to meet minimum requirements. Depending on the number

of times (and severity) a manufacturer fails to meet minimum requirements, sanctions can range from

delisting of products found not to meet the QA certification requirements after market surveillance

verification checks to the exclusion of a manufacturer from the program. There is also a need to provide

legal defense of the program’s integrity in the event of false claims with respect to QA under the scheme

made with regard to products operating either within or outside the scheme.

Managing Legal Risk

Operating any certification program carries legal risk in the event that program certification decisions

taken by the Certification Body may be subject to legal challenges on the basis that they could have

harmed sales in a given market. This may especially be the case for markets where carrying the QA

certification has been made a legal condition for the right to sell a product within that market, (e.g., as is

the case in Kenya currently). Any entity that will take on the management of the Certification Body will

thus need to be prepared to manage this legal risk.

3.3 Estimated Future Costs of Operating a QA Certification Body

The future costs of operating the LG successor QA Certification Body will depend on what choices are

made regarding its functions and structure; however, by way of guidance Navigant has produced a

theoretical cost structure that is predicated on the QA Certification Body fulfilling all the functions set

out in Section 3.2. The level of effort anticipated under this structure is set out in Table 3.1.

3 International Laboratory Accreditation Cooperation, www.ilac.org

http://www.ilac.org/


Table 3.1 Estimated Level of Effort to Operate the Off-Grid Solar Product Certification Body

from 2016-2021

Cost Units 2016 2017 2018 2019 2020 2021

FTE-e Fte 1.83 1.91 1.99 1.78 1.40 1.40

FTE-j Fte 4.01 5.61 5.95 5.38 5.38 5.38

FTE-l Fte 4.2 6.2 9.2 9.2 9.2 9.2

FTE

Subtotal

Fte 10.0 13.7 17.1 16.4 16.0 16.0

Where:

fte = full time equivalent

-e = expert staff level

-j = junior staff level

-l = local (i.e., in region of product sales) staff

The detailed breakdown of estimated costs in terms of level of effort by staff type, travel, and service

costs is shown in Table 3.2. Note, the totals by Full Time Equivalent (FTE) sum the fixed and variable

level of effort (LOE) values per activity, where the variable values are a function of the number of

products being certified each year (the assumed number is shown in the first row).

These values assume that the number of solar lanterns (pico solar) products per year certified remains

constant but the number of SHS kits certified grows from 25 in 2016 to 40 per year in 2019 and remains

constant thereafter. For some of the functions, the need for expert staff is assumed to be higher in the

initial years than later years due to them successfully managing to train more junior staff to manage

parts of the functions. The maintenance of the standard function has slightly higher needs in the near

term due to an expected effort in further developing an IEC standard applicable to SHS kits. Service

costs for public information peak in 2017 due to expected fees necessary to set up a website. Similarly,

external services costs for assisting manufacturers are assumed to be slightly higher in earlier years than

those in later years due to expected higher demand when the certification of SHS kits is a new

certification service. In-field promotion and market surveillance costs are assumed to ramp up to a peak

in 2018–2019 from a lower base in 2016, due to the program expanding into more markets and

addressing more product types, requiring a greater proportion of in-field staff, which plateau off at 9

FTE from 2018 onwards. The cost of external services is also assumed to peak in 2018 and 2019 due

largely to an assumption that legal costs will be highest in this period as the transition away from the

World Bank Group occurs and the program tackles new markets with new product types (e.g., SHS kits).

After 2019, these costs are assumed to decline as the program beds in and legal issues costs move to a

lower base. However, this is not a certainty and many certification bodies find such costs continue at a

relatively steady level.

In general, it should be noted that some of these functions and associated costs could be taken on by

other organizations than the lead Certification Body management organization, in which case the costs

incurred by the lead organization would be less than those shown here.


Table 3.2 Estimated Level of Effort to Operate the Off-Grid Solar Product Certification Body

from 2016-2021 and Cost of Travel and Services by Activity

Unit 2016 2017 2018 2019 2020 2021

1. Certify

Products

No. new products

certified each year 54 64 74 79 79 79

FTE-e 0.82 0.86 0.90 0.67 0.57 0.57

FTE-e Fixed 0.60 0.60 0.60 0.35 0.25 0.25

FTE-e Variable 0.22 0.26 0.30 0.32 0.32 0.32

FTE-j 1.83 3.28 3.48 2.83 2.83 2.83

FTE-j Fixed 0.75 2.00 2.00 1.25 1.25 1.25

FTE-j Variable 1.08 1.28 1.48 1.58 1.58 1.58

FTE-l

Travel $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Services $25,000 $25,000 $25,000 $25,000 $25,000 $25,000

2. Maintain

Standard

FTE-e 0.15 0.15 0.15 0.15 0.1 0.1

FTE-j 0.1 0.1 0.1 0.1 0.1 0.1

FTE-l

Travel $10,000 $10,000 $10,000 $5,000 $5,000 $5,000

Services $50,000 $50,000 $25,000 $25,000 $10,000 $10,000

3. Provide

Public

Information

FTE-e 0.15 0.15 0.15 0.15 0.2 0.2

FTE-j 0.2 0.2 0.2 0.2 0.2 0.2

FTE-l

Travel $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Services $25,000 $75,000 $25,000 $25,000 $25,000 $25,000


Unit 2016 2017 2018 2019 2020 2021

4. Assist

Manufacturers

/Producers

FTE-e 0.31 0.34 0.37 0.39 0.10 0.10

FTE-e Fixed 0.15 0.15 0.15 0.15 0.10 0.10

FTE-e Variable 0.16 0.19 0.22 0.24 0.00 0.00

FTE-j 0.93 1.05 1.18 1.24 1.24 1.24

FTE-j Fixed 0.25 0.25 0.25 0.25 0.25 0.25

FTE-j Variable 0.68 0.80 0.93 0.99 0.99 0.99

FTE-l

Travel $40,000 $40,000 $40,000 $40,000 $40,000 $40,000

Services $50,000 $50,000 $50,000 $25,000 $25,000 $25,000

5. In-field

promotion

and market

surveillance

activities

FTE-e 0.25 0.25 0.25 0.25 0.25 0.25

FTE-j 0.75 0.75 0.75 0.75 0.75 0.75

FTE-l 4 6 9 9 9 9

Travel $74,000 $74,000 $74,000 $74,000 $74,000 $74,000

Services $50,000 $200,000 $250,000 $250,000 $150,000 $100,000

6. Raise Funds

to Support

Certification

Body

FTE-e 0.15 0.16 0.17 0.18 0.18 0.18

FTE-e Fixed 0.10 0.10 0.10 0.10 0.10 0.10

FTE-e Variable 0.05 0.06 0.07 0.08 0.08 0.08

FTE-j 0.21 0.23 0.25 0.26 0.26 0.26

FTE-j Fixed 0.10 0.10 0.10 0.10 0.10 0.10

FTE-j Variable 0.11 0.13 0.15 0.16 0.16 0.16

FTE-l 0.2 0.2 0.2 0.2 0.2 0.2

Travel $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Services

From these estimates, it is projected that the cost of operating the Certification Body will be as set out in

Table 3.3.


Table 3.3 Estimated Cost to Operate the Off-Grid Solar Product Certification Body from 2016-2021

Activity 2016 2017 2018 2019 2020 2021

1. Certify products $370,800 $522,800 $549,800 $444,550 $427,050 $427,050

2. Maintain Standard $96,250 $96,250 $71,250 $66,250 $42,500 $42,500

3. Provide Information $81,250 $131,250 $81,250 $81,250 $90,000 $90,000

4. Assist Manufacturers $237,100 $254,850 $272,600 $256,475 $206,250 $206,250

5. In-field promotion and

market surveillance $542,750 $842,750 $1,117,750 $1,117,750 $1,017,750 $967,750

6. Fund Raising $82,750 $86,500 $90,250 $92,125 $92,125 $92,125

Total $1,410,900 $1,934,400 $2,182,900 $2,058,400 $1,875,675 $1,825,675

Share of total costs by activity

1. Certify Products 26% 27% 25% 22% 23% 23%

2. Maintain Standard 7% 5% 3% 3% 2% 2%

3. Provide Information 6% 7% 4% 4% 5% 5%

4. Assist Manufacturers 17% 13% 12% 12% 11% 11%

5. In-field promotion and

market surveillance 38% 44% 51% 54% 54% 53%

6. Fund Raising 6% 4% 4% 4% 5% 5%

3.4 Implications of the Stakeholder Survey Findings on the Value of QA

Navigant’s market research projects that the global pico solar market will grow from $205 million in 2015

to $544 million in 2020 assuming a third-party QA scheme continues at its current level of effort. If the

program does not continue, it is estimated that the market in 2020 will be $461 million, or $83 million

(15%) less than if the QA program were to continue. If the QA program is expanded to cover a greater

proportion of the global market, it is estimated that pico solar revenue would attain $612 million in 2020,

or $68 million (13%) higher than if the current level of coverage were to be maintained (see Chart 3.1

below). This differentiation in sales revenue, for the cases with and without a successor to the current LG

QA program but also depending on the efficacy of the successor program, is derived from the responses

to Question 10a in the stakeholder survey, which found that on average stakeholders estimated the

global market revenue growth rate of pico solar products would be 28% less in 5 years’ time without an

effective QA program in place.


Chart 3.1 Navigant Global Pico Solar Product Revenue Market Projections Based on Stakeholder

Survey Estimates of the Average Impact of QA on Sales, Global: 2014-2023

(Source: Navigant)

Navigant’s market research projects that the global SHS market including SHS kits will grow from $472

million in 2015 to $792 million in 2020, assuming a third-party QA scheme continues at its current level

of effort and scale. Unfortunately, there is a dearth of data on the proportion of the SHS market taken by

SHS kits, but sales of the latter are known to be growing at a faster rate. Navigant’s market research

currently projects that the global SHS kits market will grow from approximately $21 million in 2015 to

$57 million in 2020 and $107 million in 2023 assuming a third-party QA scheme continues at its current

level of effort. If the program does not continue, it is estimated that the market in 2020 will be $51

million, or $6 million (11%) less than if the QA program were to continue. If the QA program is

expanded to cover a greater proportion of the global market, it is estimated that SHS kit revenues would

attain $68 million in 2020, or $11 million (18%) higher than if the current level of coverage were to be

maintained (see Chart 3.2). This differentiation in global SHS kits market revenue growth rates for the

cases of with and without the presence of an effective QA program is again derived from the responses

to Question 10b in the stakeholder survey, where on average respondents estimated the market growth

rate in 5 years’ time would be 29% less without an effective QA program in place.


Chart 3.2 Navigant Global SHS kit Product Revenue Market Projections Based on Stakeholder Survey

Estimates of the Average Impact of QA on Sales, Global: 2014-2023

(Source: Navigant)

As discussed in Section 3.3, Navigant estimates that a QA certification program of a similar scale and

focus to today’s LG program but with a somewhat greater degree of certification of SHS kits could be

operated for approximately $2 million per year in addition to the cost of testing. Through spending this

$2m per year to support QA sales revenue is expected to be $96m higher in 2020 (a factor of 48 times

greater than the cost of the QA program) than were there to be no QA program (see Chart 3.3). Thus,

there is an overwhelming business case for the continuation of a QA certification program, as the effect it

has in suppressing market poisoning is very likely to be worth considerably more than it costs to

operate. Cumulatively from 2016 to 2023 it is projected that the QA certification program would cost $15

million to operate but would increase product sales revenues by approximately $557 million (i.e., have

an average benefit to cost ratio of 37). This increase in sales revenue is proportional to an increase in

product sales and a commensurate increase in adoption of solar-powered products in off-grid

communities.


Chart 3.3 Estimated Value in Terms of Product Sales Revenue of an Effective QA Successor Program

and Estimated Cost to Operate Such a Program: 2016-2023

(Source: Navigant)

3.5 Business Models and Prospective Revenue Analysis

The current LG QA certification program operates through a blend of product certification fees4 applied

when the product is first placed on the market as a certified product and through third-party donor

funding. The latter is a much more significant component than the former. In addition, manufacturers

are charged the full testing fees at cost for testing required for the initial product certification. These

testing fees are typically around $5,000–$6,000 for pico solar products and $8,000–$10,000 for SHS kits.

After IFC support finishes in the summer of 2017, the successor Certification Body will need to have

established a business model that generates sufficient revenue to cover its operating costs, provisionally

estimated to be between $1.4 million and $2.2 million annually from 2016 to 2021 (see Section 3.3).

In principle, it is conceivable that these revenues can be generated from the sources of:

Off-grid solar product manufacturers (industry)

Commercial stakeholders (commerce)

Third-party donor organizations (usually governments and philanthropic organizations)

4 These are $1000 per product, comprised of $500 to cover the cost of sample collection and $500 to cover a small

portion of the cost of administering the testing and verification process.


It is important to recognize that despite many years of rapid growth the industry is still nascent and

even the largest companies are relatively quite small (i.e., with annual revenues of less than $30 million).

While the stakeholder survey results are quite compelling in illustrating the value of QA to the growth of

the sector, they also show that stakeholders (and industry) are somewhat reluctant to cover the cost of

the QA effort. It is equally true that small companies are likely to be less willing and able to pay for a QA

Certification Body if the revenue business model is based solely on a fixed fee per product certified. For a

company with annual revenue of $0.5 million and a portfolio of three products, the cost of certification

with full cost recovery would be about $33,000 per year (assuming one product is certified per year),

which represents 6.6% of revenue. For a company with six products and annual turnover of $20 million,

the cost of certification with full cost recovery would be about $66,000 per year (assuming two products

are certified per year), which represents 0.033% of revenue. Were this the only option for funding the

Certification Body, it is likely the small producers would cease to participate and that revenue would be

seriously compromised (note, manufacturer revenues are only very weakly correlated with the number

of products they offer). A more realistic proposition entails a business model that combines some blend

of:

A modest (i.e., generally affordable) fixed fee per product certified

Fees that are scaled according to the producer’s annual revenue

Third-party donor funding

Chart 3.4 below presents one illustration of how this could be achieved through a combination of a levy

of $3000 per product certified, a fee of $0.008 per U.S. dollar of annual revenue (i.e., of 0.8% of revenue)

and third-party donor funding, which peaks at $760,000 in 2018 declining to zero in 2023 (at which point

the market is sufficiently mature for producer fees only to cover the Certification Body costs).

Whether this scenario is the one which is implemented or not it is clear that a business model which

relies solely on fixed-fees per certified product will not be viable in the next 5–8 years. There are too few

products requiring certification each year and too many small producers that cannot afford to pay the

amount necessary to provide full cost recovery for the Certification Body. Thus an interim business

model based on a blend of revenue sources seems to be necessary.

The following section compliments this cost and revenue analysis through the application of a SWOT

analysis to consider the merits and failings of the four potential Certification Body organizational

frameworks considered in the GOGLA QA session held in Cologne in 2014.


Chart 3.4 One Scenario of How the Cost of Operating a Certification Body Could be Recovered

Through a Business Model Combining Product Fees, Revenue Fees, and Third-Party Funding:

2016-2023

(Source: Navigant)


4. SWOT Analysis

A SWOT (strengths, weaknesses, opportunities, threats) analysis was conducted for each of the four QA

management concepts that were outlined at the GOGLA QA session held in Cologne in 2014 and set out

below.

Concept 1: Stay the Course (Third-party led, product certification)

Concept 1 suggests building on the current QA framework (third-party product certification). As the

market matures, third-party certification could include elements of self-certification (by companies with

a proven capacity and reliable track record). Two questions remain open for consideration:

What elements of the current QA framework are essential and affordable in the short and

medium term?

Is medium-term financial viability feasible?

Concept 2: Modify the Course (Concept 1 without market surveillance)

Concept 2 suggests keeping the existing QA framework but without the surveillance function (and also

without the various technical assistance/knowledge services which currently are provided) in order to

keep the cost low. This concept anticipates the future obsolescence of market spoiling prevention as the

market evolves. The industry would handle some functions of QA but the QA framework would shrink

over time leaving only quality certification and test method. Four questions remain open for

consideration:

Will a minimal version of the QA framework effectively address the needs and interests of the

market and associated stakeholders?

What is the timeframe for deconstructing the QA framework? What are the milestones?

Can a deconstructed framework be sustainably funded by the industry?

Will the absence of surveillance undermine the validity of the QA process?

Concept 3: Alternative Course (Industry-led, product self-certification)

Concept 3 suggests adding additional elements to the current QA framework, including both product-

and company-related parameters. Self-certification by manufacturing companies should be developed

and promoted. The responsible consortium should be industry-led and self-funded within 3 years. Four

questions remain open for consideration:

Is the off-grid lighting industry ready to own and self-police a label/certificate?

What are the implications of including a number of company-related parameters in the QA

framework? This suggests at least a partial shift from product certification to company/process

certification? What are the risks and challenges?


Would it be possible to make a smooth transition from the existing QA framework to this

proposed approach?


Concept 4: New Course (Hybrid leadership, supplier certification)

Concept 4 suggests moving from product certification to supplier certification. This implies winding

down QA for products, creating a supplier certification process, and establishing a third-party audit

body. The concept foresees a self-certification process for products and proposes a hybrid approach

during transition. Four questions remain open for consideration:

Does this create high barriers to new entrants?

How does this integrate and accommodate new entrants?

Who would manage and fund?

Can the complexity be managed effectively?

Schematics of the findings are shown for each concept in the four figures on the following pages.

Concept 1 emerges as the clear leading candidate from this analysis. Some of the principal reasons for

this are:

It has much higher support in the stakeholder survey and hence is more likely to maintain

adherence of industry, governments, NGOs, funders, and investors

The inclusion of product entry testing backed up by in-field market surveillance verification

testing presents the surest means of ensuring product quality of any of the concepts and thus is

the most effective at countering market poisoning; as the value of the extra QA provided to the

market is likely to be between one and two orders of magnitude greater than the incremental

cost, this concept offers the greatest benefit to cost ratio for the sector

As a direct continuation of the existing QA framework it presents the least uncertainty and

hence the lowest probability of transition difficulties, since it does not require a complete

redesign

It is likely to be the most attractive option to third-party funders.

Nonetheless the analysis of opportunities and threats for Concept 1 indicates that there is still scope to

improve its efficacy, relevance, and value for money. Efficacy can be improved through implementing

measures to reduce the certification throughput time, widening the number of labs accredited to provide

the testing service, and refining some of the procedures. Relevance can be improved by broadening the

scope to be active in more product sectors (beginning with SHS kits but potentially also components,

appliances, and maybe SHSs); increasing the effective geographical coverage (principally by broadening

engagement with the program in the Indian subcontinent and Southeast Asian markets); and by

adapting the program to better address product counterfeiting. All of these measures will help improve

the financial viability of the Certification Body. Increasing product coverage increases the number of

products being certified each year and hence increases the total annual value of the product certification

fees at a rate that is greater than the commensurate increase in the Certification Body’s operating costs.

The same is true from deepening the program’s geographical penetration in the Indian Subcontinent and

East Asia. By adapting the program to better counteract product counterfeiting, the value of the program

will increase for the larger market players that tend to be a preferential target of counterfeiters. As a

result, the value of the program to the market leaders will increase and their willingness to support a

Certification Body revenue model based on a fixed percentage of annual turnover or some other formula

reflecting the ability to pay will also increase. Thus all these measures should be countenanced as a

means to improve the program and its viability.


Lastly, the governance framework adopted for the successor Certification Body is also likely to be critical

to its success. On the one hand, a lean and non-bureaucratic structure will be needed that will facilitate

effective decision-making. On the other it will be important for the governance to reflect both

commercial and wider societal interests if it is to maintain a high integrity and broad-based support. The

governance structure chosen will not just need to have a high integrity in practice but will need to be

perceived to have a high integrity by all key stakeholders if their support is to be given. In the near term,

this will be important to maintain adherents and to raise third-party funding during the transition

period. Over the longer term it will be important to deepen geographical scope and country cooperation.

Some additional remarks on Concepts 2 to 4 are presented below.

Concept 2 is similar to Concept 1, but by excluding in-field market surveillance, it considerably weakens

the caliber of the QA provided—this will lead to greater market poisoning than in Concept 1, while the

benefit of reduced operating costs will most likely be greatly outweighed by the loss of market revenue

due to increased market poisoning. It has much less stakeholder support in the survey than Concept 1.

By moving to self-certification, Concept 3 relies on manufacturer honesty and removes one of the main

mechanisms of ensuring QA (third-party administered initial [entry] certification). Such an approach

would either weaken the caliber of QA provided and hence increase market poisoning or would oblige a

significantly greater market surveillance and check testing effort to attain the same level of QA overall.

The latter option would be more costly than the blend of entry level and market surveillance-based

testing foreseen in Concept 1. Concept 3 does have the advantage of certified products being faster to

market but this is less relevant if: a) steps are taken to speed up the certification process in Concept 1

(note several steps in this direction are being undertaken by the LG QA program) and b) if the perceived

value of the certification mark is diminished by the move to self-certification. The stakeholder survey

indicates that Concept 3 has much less stakeholder support than Concept 1.

Concept 4 envisages a move away from product certification toward supplier certification. In principle

this could result in some costs and certification time savings, as it would imply self-certification of

products. However, this would come at the cost of reduced certainty of the quality of each product

carrying the certification mark, which would both risk increasing market poisoning and lowering

confidence in the program. Additionally, the program implies a much greater transition than Concept 1

(which is essentially the continuation of the current LG QA process) and this carries additional risks due

to the need to manage the development and shift to a new focus while picking up where the LG QA

program left off and keeping stakeholder engagement and confidence in the program high. Experience

so far has also shown that currently very few producers are able to have their products pass the LG QA

certification at the first attempt, and this suggests that the sector is not sufficiently mature or established

to merit a shift toward supplier-based certification. Supplier certification would also necessitate a greater

effort on market surveillance-based check testing, and thus the product entry testing cost savings would

be more than taken up by extra market surveillance costs if market poisoning was not to be significantly

increased. Confidence in this concept does not appear to be high and it has much less stakeholder

support in the survey than Concept 1.



Strengths

Comprehensive QA provided (at product

entry and when on market)

Widely understood with high level of

stakeholder support

Incumbent program with proven track record

High integrity—the CB management

organization has no interests aligned with

commercial interests in the sector

High level of credibility with key stakeholders

IEC QA framework in place for pico solar

products

Will be relatively straightforward to transition

as new design is not required

Weaknesses

Per product revenue model insufficient

Little focus on anti-counterfeit measures

Certification time could still be reduced

QA measurement standards not yet available

for all SHS types

Needs to transition to new ownership

Opportunities

High stakeholder support increases first- and

third-party funding options

Could increase market surveillance activity

Can be extended to address counterfeit

products—may increase funding from

market leaders

Can be extended to SHS kits and SHSs

Broadening geographical focus

Could amend IEC QA standard to include

SHS kits

Options to increase throughput speed

Options to use more commercial labs

including in China

Threats

Existing third-party funding will end—needs

new sources in near/middle term

Needs to evolve to new business model less

reliant on third-party funding

Reduced funding could curb effectiveness

and credibility

The transition from LG to a new

body/structure may not run smoothly

SWOT

Analysis



Strengths

QA provided at product entry

Slightly lower operating costs than Concept 1

Widely understood

Adapts incumbent program

IEC QA framework in place for pico-solar

products

High integrity—the CB management

organization has no interests aligned with

commercial interests in the sector

Will be relatively straightforward to

transition as new design is not required

Weaknesses

Reduced means of deterring the sale of poor

quality products—market poisoning effect

increases and sales of quality verified

products expected to decline

Low stakeholder support

Low support reduces third-party and first-

party funding options

No ability to verify performance after initial

samples taken


Per product revenue model insufficient

Certification time could still be reduced

QA measurement standards not yet

available for all SHS types


Opportunities

Could re-introduce market surveillance once

third-party funding is secured

Could be extended to address counterfeit


market leaders

Could be extended to SHS kits and SHSs

Could have a broader geographical focus

Could amend IEC QA framework to include

SHS kits

Options to increase throughput speed


including in China

Threats

Low stakeholder support may undermine the

program

Reduced credibility may undermine the

program






and credibility



SWOT

Analysis



Strengths

Minimum certification time

QA provided at product entry

Lower operating costs than Concept 1 or 2

IEC QA framework in place for pico solar

products

Weaknesses

No means of deterring the sale of poor quality

products—market poisoning effect is high and

sales of quality verified products expected to

decline


Low support reduces third-party and first-

party funding options

No verification of performance after samples

taken or in the market

Low credibility and relevance to stakeholders


Per product revenue model still likely to be

insufficient


for all SHS types


Opportunities

Could be extended to address counterfeit


market leaders



Could amend IEC QA framework to include

SHS kits


including in China

Threats

Low stakeholder support likely to

undermine the program

Reduced credibility likely to undermine the

program

Existing third-party funding will end—

needs new sources in near/middle term




and credibility



SWOT

Analysis



Strengths

No delay in product placement due to

certification

Potential for lower operating costs than

Concept 1

IEC QA standard in place for pico solar

products

Hybrid leadership could be appealing to

third-party funders

Weaknesses

Reduced certainty in deterring the sale of

poor quality products—market poisoning

effect increases and sales of quality verified

products may decline


Low support could reduce third-party and

first-party funding options

No verification of performance when product

is first placed on the market

Uncertain credibility and relevance to

stakeholders


Revenue model is uncertain and unlikely to

be insufficient


for all SHS types

Opportunities

Could facilitate adoption of anti-

counterfeiting focus—may increase funding

from market leaders



Could amend IEC QA standard to include

SHS kits


including in China

Threats

Low stakeholder support likely to

undermine the program

The transition from Lighting Global’s current

framework to a new body/structure may not

run smoothly and will be complicated by

need for complete new design

Less certain credibility may undermine the

program






and credibility

SWOT

Analysis


5. Conclusions and Recommendations

In summary, the stakeholder survey results found there is:

Strong support for the continuation of a QA certification program

Interest in extending the focus to cover SHS kits and counteracting counterfeit/imitation

products

An average estimated suppression in market growth of 28% over the next 5 years if an effective

solar off-grid product QA program is not maintained

Strong preference to continue with the current QA initial product certification and market

surveillance model

Strong preference for governance of a post-LG QA program to be via a public-private

partnership

Mixed feelings about the best revenue model to be applied to fund the QA Certification Body

Lack of consensus on willingness to fund a program

However, analysis of the stakeholder survey and Navigant market projections indicates an estimated

market value from an effective successor QA certification program of equivalent to more than 48 times

the cost to operate it by 2020, thus there is an overwhelming business case for the continuation and

funding of such a program and it is clearly in the sector’s own interest to support such an initiative.

Effectively communicating this business case to key stakeholders that are in a position to help sustain the

QA effort will therefore need to be a priority of the LG QA Certification Body successor organization.

For the successful continuation and evolution of the current program it is concluded that:

Analysis of prospective Certification Body revenue models shows that a model based solely on

product certification fees would be insufficient and unstable—therefore, a blend of these

organization revenue-based dues and donor funding will be needed until the industry becomes

sufficiently developed for it to become viable for the QA program to attain full cost recovery

from industry in about 2021–2024

Identification of a strong organization or coalition of actors with the right qualifications and

motivation is essential

The organization/actors will require strong fund raising capacity

A QA Certification Body that is both equipped and willing to address legal liability issues is

necessary

Ensuring the legitimacy of the organization in the eyes of key stakeholders including industry,

government, investors, etc. will require a broad-based and credible governance structure for

management of the funding and legal liability challenges to be successful

IFC funding cannot be guaranteed beyond 2 years’ time, so decisions on how to progress the QA

program need to be taken rapidly to have a reasonable prospect of a successful transition


It also needs to be recognized that it is unlikely that a candidate successor organization will be available

that is currently able to fulfil all the functions required of the Certification Body (see Section 3.2), and

therefore prospective applicants should consider which functions they are well suited to provide and

which they would need to be teamed with other agencies to provide. It is quite likely that the most

viable outcome will be a consortium that combines the capabilities of more than one body to provide the

required services.

Each of these aspects will need to be addressed for the QA program to continue and thrive.


Appendix A: Scope of Work

The IFC’s Lighting Global program and the U.S. Department of Energy’s (DOE’s) Global LEAP initiative,

in consultation with GOGLA and other partners, are looking to establish an independent and self-

sustaining international QA program for solar-powered off-grid lighting and energy systems and

associated appliances. This program will build upon the existing QA programmatic activity for solar-

powered lighting and energy systems developed through the Lighting Global program and its

predecessor, the Lighting Africa program, in partnership with Global LEAP and other organizations.

Because programmatic support from the World Bank Group will only be available for a few more years,

there is a need to transition these QA activities to a self-sufficient platform.

IFC/Lighting Global intends to issue a call for EOI for organizations or coalitions of organizations that

are interested to play a role in delivering QA services in the off-grid lighting and energy systems market.

Selection of organizations will be based on the bidding consortia’s capacity, the sustainability of its

business model, and other related criteria.

To help inform the EOI and to support potential applicants in framing their submissions the DOE, in

collaboration with the IFC, Global LEAP, and GOGLA engaged Navigant Consulting to provide relevant

evidence and analysis to help inform thinking about how best to establish an independent and self-

sustaining QA organization that would manage the principal required quality assurance tasks.

This report will present the findings of this work. The document will be written to inform potential

bidders about key aspects of the off-grid lighting and energy systems market, the potential to generate

revenue from the industry through the provision of QA services, and other information related to the

development of a successful QA framework.

A1. Background

The scope of work described below in this document builds upon discussions and analysis previously

conducted by IFC and its partners (including the World Bank, GOGLA, the DOE, GIZ, and the Schatz

Energy Research Center) and in particular takes into consideration:

Analysis conducted by Navigant funded by the DOE in close collaboration with IFC/World Bank

on potential strategies for establishing a sustainable off-grid lighting Certification Body

Discussions regarding the potential future nature of QA for off-grid lighting that occurred at the

GOGLA Quality Assurance Symposium held in Cologne, Germany on April 2–3, 2014

At this GOGLA Symposium it was recognized that:

The main stakeholders of an off-grid lighting QA framework are manufacturing industry,

distributors, global development organizations, NGOs, regional aid agencies, governments,

financial institutions, and end users.

The key purpose of the QA effort is to build confidence in the solar off-grid market by signaling

product quality to market actors in a clear, transparent, and trustworthy manner such that

product buyers/procurers can make an informed choice.


The QA messaging objective should focus on product quality and performance for affordable

off-grid lighting and energy systems, and it may also cover aspects such as ecological, social, and

ethical benefits.

The target groups of such a QA framework may be B2B (business to business), B2G (business to

government), and B2C (business to consumers).

A QA framework could be communicated through print and electronic media, on-package

information, webinars, and conferences.

Key success factors for a QA framework include:

‒ A comprehensive approach for managing QA

‒ The alignment of all major stakeholders

‒ Clear standards and procedures

‒ A clear strategy for communication of quality to B2B, B2G, and B2C audiences

‒ Enforcement and surveillance

‒ A lean organization with financial stability and the utilization of existing activities of

market players as much as possible

‒ A motivated organization that is committed to delivering core QA services, even when

funding resources are limited

‒ Established revenue streams that enable the sustained delivery of QA services to

support the industry’s growth going forward

Potential implementing entities could include an existing certification house, an industry

organization or manufacturers association, or a new independent Certification Body or

consortium.

Potential partners could include industry, multinational agencies, state or national governments,

NGOs, distributors and retailers, among others.

The eventual QA framework should include a plan that allows for a smooth transition from the

existing Lighting Global Quality Assurance program in order to minimize disruption within the

industry.

During discussions among the GOGLA Symposium delegates concerning the future of the QA

framework, the following four different concepts emerged:





These four concepts are described briefly below.




a proven capacity and reliable track record). Two questions remain open for further discussion:



medium term?




without the various technical assistance/knowledge services that currently are provided) in order to



over time, leaving only quality certification and test method. Four questions remain open for further

discussion:







Concept 3 suggests adding additional elements to the current QA framework, including both product



questions remain open for further discussion:




certification. What are the risks and challenges?



proposed approach?





during transition. Four questions remain open for further discussion:






A2. Scope of Work

The effort will be led by Navigant with oversight from the IFC Lighting Global QA program. In addition,

GOGLA provided specific assistance in reaching out to its industry members and reviewing draft

material to provide an additional perspective reflective of the off-grid lighting industry.

The consultant aims to gather information and conduct analyses to assess the most viable pathway for

effective continuation of QA for off-grid solar lighting and energy products and appliances in a world

where support from the IFC for QA is only likely to continue for a few more years.

The consultant aims to seek to address a set of key research questions that relate to the anticipated

development of the off-grid lighting and energy systems market, the potential for revenue generation to

support QA activities from within the industry and from other sources, and the implications of

expanding the current QA framework to encompass other market segments such as SHS kits and

appliances designed for use in the off-grid sector. A SWOT analysis is also needed to analyze the

viability of the various concepts.

The key research questions, most of which were identified at the GOGLA Symposium, that the

consultant will undertake are set out in the following four tasks when making this assessment:

1. Market Research: Future Sales and Industry Profile

Task 1 focuses on defining at a high-level what is possible in terms of market growth over the next 3

(near-term) and 8 (medium-term) years. This work will focus on developing three scenarios and

identifying the possible configuration of the industry with respect to the degree of consolidation or

fragmentation over the same periods. This market research is not intended to be comprehensive and

extensive, but rather is intended to set create alignment between key stakeholders on the likely size and

composition of the off-grid market, and set the foundation for reasonable business planning for a QA

effort based on the industry size and profitability.

Specifically, the work in Task 1 will address the following questions:

a) What are the sales projections for 3 and 8 years into the future (by product type – including lanterns

and SHS kits)?

Global projections are to be provided. When available, regional breakdown can be added,

but is not required.

The timeframes of 3 and 8 years is required for programmatic decision-making.

Project segmentation includes quality-assured products in two categories: lanterns (i.e., pico

solar) of systems 10 watts or less and SHS kits, including systems 10 W—150 W.

b) What is the industry profile today, in 3 and 8 years’ time, in terms of number of companies,

composition (concentration or fragmentation), and types of key market players (e.g., affiliated with

larger global company or standalone)? Based on the anticipated industry profile, what are the

implications for a) need and role of QA and b) economics feasibility of providing QA services?


2. Revenue Analysis: Potential for Revenue Generation to Support QA Activities

Task 2 focuses on fleshing out the four potential revenue models for a self-sustaining QA effort. Central

to Task 2 is a willingness-to-pay survey followed by a smaller set of stakeholder interviews. Task 2 is

where most effort is concentrated in this SOW.

As discussed by GOGLA, IFC, HSU, and Navigant in Dubai, the stakeholders to be included in the

outreach are as follows, including the approximate numbers for the survey and interviews:

Table A.1 Stakeholder Types Targeted For QA Survey

Category Sub-Category Survey Target

Number

Interview Target

Number

Manufacturers Small lighting

products

10 2

Kits and systems 5 1

Buyers Distributors 5 1

Bulk purchasers 3

PAYG model 4 1

Enablers Government and

Foundations

4

Financiers 4

TOTAL 35 5

The survey was designed by Navigant and GOGLA. GOGLA conducted the survey for its members and

Navigant for non-GOGLA stakeholders. In addition, Navigant also conducted interviews among market

players with the highest market share.

Specifically, the work in Task 2 is designed to address the following questions:

a) What revenue models are possible and what are the implications of each?

b) What is the industry’s willingness to pay for QA?

What are companies willing and able to pay for QA in the long run?

Are industry leaders willing and able to pay more for QA than smaller firms and early

market entrants? If so, what would they require in return?

Which organizations, beyond firms active in the industry, might be willing to fund QA for

the off-grid lighting market and what are their motivations for doing so?

c) Is there potential for expanding revenue or scope?

What new or additional revenue streams beyond solar lantern certification are viable?

What segments of the off-grid energy market could be covered by the QA framework? (e.g.,

pico solar, SHS kits, appliances for off-grid applications, and/or other segments of the off-

grid renewable energy market).


3. SWOT Analysis: Four QA Concepts

Task 3 assesses the four concepts using a SWOT framework (Error! Reference source not found.). In an

effort to streamline the work, Task 3 is performed at a high-level and discussed with the project

participants. What are the strengths and weaknesses of each concept (internal environment), including:

What elements of the existing QA framework are essential and add value?

Financial viability with respect to revenue generation and costs (i.e., the viability of the business

model)

Effectiveness in delivering adequate QA to minimize market poisoning and allowing the most

rapid development of the solar off-grid lanterns and appliances market

Ability to support existing market players while also enabling new entrants to successfully join

the market

Potential governance structure?

What are the opportunities and threats to each concept (external environment)?

When reviewing implementing partners, the work will also consider what organizations are already

active in other relevant segments of the market. Where other organizations are active, consider the

potential for synergistic engagement rather than unnecessary duplication.

Figure 1: Definition of SWOT


4. Findings and Recommendations

a) Summarize findings of analysis performed in Tasks 1 through 3

b) Provide recommendations to the Lighting Global program with respect to (a) the most viable

concept(s), (b) how to get the best results using the results of the analysis in Task 1 through 3 in the

release of an EOI

While conducting this assessment, the consulting team will work closely with IFC and its partners in

order to determine their views and concerns and help build consensus among the diverse market actors

regarding the most effective means of ensuring off-grid product QA in the near, medium, and longer

term. Frequent communication with these partners will therefore be an important aspect of the work.

The assessment is mindful that the effectiveness of the QA activity in terms of building confidence in the

solar off-grid product market will be contingent on the scale and quality of the QA activity, which in

turn will have implications for operating costs but will also have an impact the size of the off-grid

product market and on the QA organization’s revenue generation potential.


Appendix B: Market Forecasts

B1. Introduction

The aim of this analysis is to provide Lighting Global a reasonable forecast for both the pico solar and

SHS markets over the next 10 years. The forecast is to be used to assess the ability of the key value chain

players to support a global quality program. Thus, the focus of the data gathering and reporting is on the

number of solar products sold globally and the associated revenue, results by key regions, and the

overall industry structure. There are two central research questions this section of the report is intended

to address:

What are the sales projections for 3 and 8 years into the future (by product type—including

lanterns and SHS kits)?

What is the industry profile today, in 3 and 8 years’ time, in terms of number of companies,

composition (concentration or fragmentation), and types of key market players (e.g., affiliated

with larger global company or standalone)? Based on the anticipated industry profile, what are

the implications for a) need and role of QA and b) economics feasibility of providing QA

services?

The analysis is organized by presenting the overall market for pico solar and SHSs, followed by a

regional analysis of pico solar and SHS markets separately.

B2. Methodology

In order to develop the forecasts in this section, Navigant utilized a combination of company interviews

and company-reported sales data, third-party industry reports, and its own market reports on the topic,

including Solar Photovoltaic Consumer Products. The challenge for the report was to cover and compare

the markets across numerous dimensions including products (pico solar vs. SHSs), geographical regions

(Asia Pacific vs. Africa), timeframes (2014, 2017, and 2024), and deployment (units vs. sales revenue) in a

relatively short report. The forecasts include both quality-assured and non-quality-assured product

sales.

B3. Market Definition

Navigant utilized the two following product definitions for this report:

Pico solar systems: These are entry-level lighting products that cost between $10 and $40 and

integrate small solar modules (generally <10 W) with white LEDs. These products are commonly

referred to as solar lanterns and frequently also include additional capabilities such as mobile

phone charging.

Solar home systems: A typical SHS includes a solar panel (10 W–200 W), a vehicle lead-acid

storage battery, multi-light source applications with mobile phone charging outlets, and often

times direct current (DC)-powered appliances such as a radio. The entire system typically costs

between $50 and $500.


B4. Pico Solar and SHS Forecasts

Combined annual unit sales of pico solar lighting and SHSs are forecast to grow from 8.2 million in 2014

to 64.3 million in 2024. Annual revenue from the sale of these products is expected to increase from

$538.2 million to $2.1 billion over the same timeframe. Asia Pacific is expected to remain the leading

market for pico solar and SHS sales revenue through 2018. In 2019, Africa is expected to surpass Asia

Pacific in annual revenue and remain the largest market through 2024.

Asia Pacific is forecast to grow from an annual pico solar and SHS market of $376.5 million in 2014 to

$992.3 million in 2024, while the market in Africa is expected to grow from $148.6 million to $1.1 billion.

After the two key regional markets, there is a significant drop in unit sales and revenue. Latin America is

expected to be the third largest market in 2014 with $7.0 million in revenue, growing to $13.8 million in

2024. The Middle East is expected to grow from $3.5 million in revenue to $15.2 million during the same

timeframe.

Chart B1. Annual Pico Solar and Solar Home System Unit Sales and Revenue by Region,

World Markets: 2014-2024


$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

AfricaMiddle EastLatin AmericaAsia PacificGlobal RevenueAsia Pacific RevenueAfrica Revenue

Un

it S

ales

($ R

eve

nu

e)


Chart B2. Annual Pico Solar and Solar Home System Revenue by Region and Product Type, World

Markets: 2014-2024


B5. Pico Solar

The annual pico solar lighting market is forecast to grow from 6.5 million units sold in 2014 to 56.7

million units in 2024, representing annual capacity additions of 19.4 MW and 396.9 MW, respectively.

Revenue from sales of those units will increase from $110.9 million in 2014 to $858.9 million in 2024.

Prices are expected to be stable during the next 5 years until 2019, when pico solar lighting is expected to

become so ubiquitous that prices will be reduced in response to growing competition.

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Pico - Asia Pacific

Pico - Latin America

Pico - Middle East

Pico - Africa

SHS - Asia Pacific

SHS - Latin America

SHS - Middle East

SHS AfricaRev

enu

e ($

)

SHS - Asia Pacific

Pico - Africa

Pico - Asia Pacific

SHS - Africa


Chart B3. Annual Pico Solar Sales by Region: 2014-2024


Africa

The annual pico solar market in Africa is expected to grow from 4.1 million units sold in 2014 to

43.3 million in 2024, representing a compound annual growth rate (CAGR) of 26.6%. Annual pico solar

installed capacity in Africa will grow from 12.3 MW in 2014 to 303.2 MW in 2024. In total, 277.5 million

pico solar lighting products are expected to be sold between 2014 and 2024, representing nearly 1.5 GW

of installed capacity (albeit with a significant proportion of capacity retirements expected over this time

frame) and $4.2 billion in sales revenue.

Kenya, Tanzania, and Nigeria are expected to continue to be the leading countries for pico solar sales

throughout the forecast period. The pico solar market in Kenya is forecast to grow from 1.5 million

annual unit sales in 2014 to 9.5 million in 2024. In Tanzania, the market is expected to grow from 1.2

million to 8.0 million in annual unit sales. The leading pico solar companies, such as d.light, Greenlight

Planet, and Barefoot Power, all have a strong presence in these three countries and will continue to pull

ahead of competitors due to a growing sales presence and increased brand recognition. As less

successful companies exit the market, their market share will be picked up by the leading companies,

further cementing their position in the market and reducing customer acquisition costs. Furthermore,

new entrants, particularly those that offer pay-as-you-go5 (PAYG) services such as M-KOPA, are

5 Pay-As-You-Go uses machine-to-machine communications technology enabled by cellular networks to enable

customers to pay for lighting service credits from an off-grid solar lighting product through their mobile money

accounts. Customers typically provide an upfront fee or deposit and then make payments for lighting service at a

rate that is less than what they would typically spend on kerosene – while receiving significantly higher quality

lighting service.

$-

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

$900,000,000

$1,000,000,000

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Africa

Middle East

Latin America

Asia Pacific

Revenue

Un

itSa

les

Rev

enu

e ($

)


available in Kenya, Tanzania, and Uganda and are expected to scale quickly. For example, it took 2 years

for M-KOPA to sell its first 100,000 pico solar lanterns (starting from early 2013)—but only 2 months to

sell its next 100,000 systems. By March 2015, the company reported selling 500 new systems each day

across Kenya, Uganda, and Tanzania. The company now manages a network of over 1,000 direct sales

agents and 85 customer service centers across East Africa. Other companies such as Angaza Design have

created a PAYG platform that can be utilized across multiple products, and does not produce its own

product. Other companies offering PAYG for pico solar and/or SHS products include SunTransfer,

Azuri, Mobisol, Fenix International, BBOXX, and many others6.

As customers leverage these innovative financing sources and move up the energy ladder, eventually

acquiring larger systems, there is significant potential for millions of repeat customers who will be

looking to replace or upgrade their existing pico solar products in a few years. This underscores the

importance of quality products and brand recognition for long-term sales success.

Strong competition in Kenya and Tanzania has led companies to expand outside of these two core

markets. More than 20 African countries currently have an active market for pico solar lighting products.

By 2024, leading pico solar companies are expected to have a presence in every country on the continent

and few of the lower-quality brands will be able to compete due to improvement in customer education

regarding quality and significant private sector financing secured by incumbents enabling them to scale

and reduce costs. Illustrating the highly dispersed nature of pico solar product sales across the continent,

the Rest of Africa segment accounts for more than half of the total African market. It is important to note

that World Bank (and similar) energy access programs that provide financing for off-grid solar, such as

the recent program in Ethiopia (included in Rest of Africa), have a major impact on growth.

6 According to the Consultative Group to Assist the Poor (CGAP), a World Bank-backed umbrella group of 34

organizations, at least 25 companies are promoting pay-as-you-go solar products and services across the developing

world, with an estimated 250,000 such products sold as of late 2014. The organization projects that at least 3 million

pay-as-you-go solar systems will be sold around the world in the next five years.


Chart B4. Annual Pico Solar Unit Sales by Country, Africa: 2014-2024


Asia Pacific

Annual pico solar sales in Asia Pacific are expected to grow from 2.2 million in 2014 to 12.5 million in

2024, representing capacity of 6.6 MW and 87.7 MW, respectively. Annual revenue from these sales is

expected to increase from $37.5 million to $187.9 million during this time.

India will represent the vast majority of pico solar sales in the region during the forecast period, with

annual revenue growing from $31.3 million to $121.7 million. While there continues to be strong

opportunity for pico solar providers, government, and donor subsidies for off-grid lighting have

primarily targeted the solar home sector. There is no clear leader in the pico solar market in India,

though companies such as Barefoot Power, Greenlight Planet, d.light, and local players such as Tata

Power have a growing presence. The pico solar market in India is more fragmented relative to the more

established SHS market. The SHS market is more developed, in part, because of the longstanding

network of rural banks and microcredit providers. Bangladesh is the second-largest pico solar market in

Asia Pacific, with sales growing from an annual market of $3.4 million in 2014 to $8.2 million in 2024.

$-

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5

10

15

20

25

30

35

40

45

50

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($ M

illio

ns

)

(Mil

lio

ns

)

MalawiSouth AfricaMoroccoZimbabweZambiaKenyaTanzaniaNigeriaRest of AfricaRevenue


Coming from a small starting point of 3,000 pico solar unit sales in 2014, the Philippines is forecast to

grow at the most aggressive CAGR in the Asia Pacific region. It is expected to reach 2.0 million annual

unit sales in 2024 at a CAGR of 92.1%. The country’s 7,000 islands, fast-growing population, high

cellphone penetration, and frequent natural disasters make it a prime target for pico solar sales.

Similarly, due to large un-electrified populations and low incomes, Cambodia is ripe for growth with the

right distribution channel. Pico solar unit sales in that country are forecast to grow at a 76.2% CAGR

from 3,000 annual unit sales in 2014 to 864,000 in 2024. China was not included in this analysis due to

lack of data availability. However, with an electrification rate of 99.7%7 (compared to 75% for India8),

China is not likely a major market.

Chart B5. Annual Pico Solar Sales by Country, Asia Pacific: 2014-2024


Latin America

It has been difficult for pico solar companies to gain traction in Latin America. With relatively smaller

un-electrified populations compared to Asia Pacific and Africa, the total addressable market is smaller.

The largest government-sponsored rural electrification program was carried out by Brazil in the early

2000s and reportedly resulted in bringing the electrification rate to 91%, up from 70%. The program had

a strong emphasis on SHSs. Pico solar companies have had moderate success in Costa Rica, but Latin

America is not forecast to change course from its limited market today. The pico solar market in the

region is expected to grow from $637,500 in 2014 to $2.6 million in 2024.

7 http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS 8 Ibid.

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($ M

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(Millio

ns)

IndiaBangladeshNepalIndonesiaPhilippinesCambodiaRest of Asia PacificRevenue


Middle East

The Middle East is the smallest pico solar market with $365,484 in annual revenue in 2014, and is forecast

to grow to almost $2 million in 2024. Government programs have primarily focused on large-scale

deployment of renewables. Fuel subsidies are also a major deterrent for the economic competitiveness of

pico solar products. Other than phone dealers, an established local brand to provide solar lighting

products does not currently exist in most Middle Eastern companies. There is an opportunity for an

established Middle Eastern brand, however, to set up a joint venture with a leading phone dealer or

other local retailer and be successful in the region.

B6. Solar Home System Forecast

The annual SHS market is forecast to grow from 1.7 million units sold in 2014 to 7.6 million in 2024,

representing annual capacity additions of 34.5 MW and 227.2 MW, respectively. The revenue from sales

of those units is expected to increase from $427.3 million in 2014 to $1.3 billion in 2024.

Chart B6. Annual Solar Home System Unit Sales by Region, World Markets: 2014-2024


Asia Pacific

Asia Pacific is expected to be the leading market for SHSs throughout the forecast period, with 1.4

million annual unit sales in 2014, which is expected to grow to 4.8 million in 2024. This represents annual

SHS markets of $339.0 million and $804.4 million, respectively. In total, 30.8 million units are expected

to be sold cumulatively in Asia Pacific between 2014 and 2024, representing 827.4 MW and $5.9 billion

in sales revenue.

Annual unit sales in Bangladesh, the leading global market for SHSs, are forecast to grow from 1.0

million in 2014 to 2.7 million in 2024. This represents annual SHS markets of $250.0 million and

$468.1 million, respectively. The country’s highly successful Infrastructure Development Company

$-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Africa

Middle East

Latin America

Asia Pacific

Revenue

(Un

it S

ales

)

Re

ven

ue

($)


Limited (IDCOL) program, strong networks of installers and dealers across the NGO and private-sector

spectrum (including Grameen Shakti), and abundant microcredit providers make Bangladesh a very

strong market for SHSs. The continued reduction of subsidies has not reduced the market for SHSs, and

customer satisfaction rates are high.

India is the second-largest SHS market in the world with 240,000 annual unit sales in 2014, expected to

increase to 1.0 million in 2024. This represents annual SHS markets of $60.0 million and $179.4 million,

respectively. India’s SHS incentive programs are comparatively more bureaucratic than in Bangladesh.

The country’s ambitious National Solar Mission calls for as many as 20 million SHSs installed by 2022.

Navigant Research forecasts roughly one-third of that target will be met in that timeframe. As in

Bangladesh, and unlike in Africa, local companies are the leading players. Tata BP, SELCO, and others

have been operating in the SHS market in the country for more than 20 years. Furthermore, specific

design requirements established by the government do not fit well with foreign company-led custom

designs. An important trend to watch will be the potential growth of PAYG services, which do not

currently exist in India. The business model would work well in India, but traditional banks have

lobbied against the service, mostly out of fear of ceding potential profits to new market entrants.

Annual unit sales in Indonesia, the third largest SHS market in Asia Pacific, are forecast to grow from

58,000 units in 2014 to 522,137 in 2024, followed by Nepal with 41,102 units in 2014 and 278,628 in 2024.

The Philippines and Cambodia are the next two largest markets, followed by the Rest of Asia Pacific

region.

Chart B7. Annual Solar Home System Unit Sales by Country, Asia Pacific: 2014-2024


$-

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$200

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$500

$600

$700

$800

$900

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1

2

3

4

5

6

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($ M

illio

ns

)

(Mil

lio

ns

)

IndiaBangladeshNepalIndonesiaPhilippinesCambodiaRest of Asia PacificRevenue


Africa

Africa is expected to be the second-largest market for SHSs throughout the forecast period, with sales

growing at a 23.8% CAGR from 315,447 units in 2014 to 2.7 million in 2024. New annual SHS installed

capacity in Africa is expected to grow from 6.3 MW in 2014 to 80.0 MW in 2024. In total, 12.5 million

SHSs are expected to be sold cumulatively in Africa between 2014 and 2024, representing 344.0 MW of

installed capacity and $2.3 billion in sales revenue.

Kenya is expected to be the largest market for SHSs in Africa throughout the forecast period, growing

from 66,000 unit sales in 2014 to 581,145 in 2024. This represents annual SHS markets of $16.5 million and

$99.4 million, respectively. Pico solar sales have led the market in Kenya thus far, with the vast majority

of sales in the entry-level 1 W–3 W product segment. As customers continue to gain trust in the growing

number of quality products in the market and incomes increase, customers will move up the energy

ladder and purchase larger SHSs. Growth of SHS market in Kenya is also based on more than 20 years of

product sales in the country, particularly of smaller SHS (e.g., <20W). Energy entrepreneurs are setting

up small businesses out of their homes, utilizing SHSs to charge cell phones and batteries, a trend that is

driving adoption of larger systems. South Africa is estimated to be the second-largest SHS market in

Africa, with unit sales expected to grow from 61,600 in 2014 to 542,402 in 2024. This represents annual

SHS markets of $15.4 million and $92.8 million, respectively.

The richest man in Zimbabwe, Strive Masiyiwa, founder and executive chairman of publicly listed

mobile telecom company Econet Wireless, launched a PAYG SHS under its subsidiary, Econet Solar. Its

vertical integration, captive customer base, and existing operations in Botswana, Lesotho, Burundi, and

Rwanda demonstrate the strong growth opportunities for SHSs in new African markets.

Annual unit sales of SHSs in Zimbabwe are expected to grow from 52,800 units in 2014 to 464,916 in

2024. Tanzania is the next-largest market by revenue, followed by Nigeria, Morocco, Zambia, Malawi,

and the Rest of Africa. Nigeria suffers from a lack of grid reliability and is a prime opportunity for

growth. Morocco’s government implemented a wide-scale rural electrification program from 1995 to

2008 that included 50,000 SHSs. Although this program is generally considered successful, customer

complaints about the quality and cost of the systems used opens the door to offer lower-cost and more

reliable products.


Chart B8. Annual Solar Home System Unit Sales by Country, Africa: 2014-2024


Latin America

Annual unit sales of SHSs in Latin America are forecast to grow at a modest 10.0% CAGR from 25,300

units in 2014 to 65,622 units in 2024, representing 0.5 MW and 2.0 MW in installed capacity, respectively.

Annual revenue from sales of SHSs is expected to increase from $6.3 million to $11.2 million during the

forecast period. In total, 468,839 SHS units are expected to be sold cumulatively between 2014 and 2024,

representing 12.5 MW of installed capacity and $91.4 million in sales revenue.

Compared to Asia Pacific and Africa, Latin America has a lower percentage of un-electrified

populations. Several countries initiated rural electrification programs during the 1990s and early 2000s.

The most notable program was initiated in Brazil as a result of an entrepreneur named Fabio Rosa, who

pioneered the microcredit approach to SHSs. As those systems need to be replaced or upgraded, there is

considerable opportunity for companies to move in and take advantage of the high existing levels of

customer awareness. Several companies have targeted Costa Rica, Nicaragua, and Mexico, but have been

met with limited success despite the high degree of grid unreliability—especially in the latter two

countries. Numerous local SHS companies exist in these regions, but are particularly focused on urban

installations, leaving NGOs to implement renewable energy projects in remote villages, notably in Peru,

Ecuador, and Nicaragua.

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1.0

1.5

2.0

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

($ M

illio

ns)

(Millio

ns)

Malawi

South Africa

Morocco

Zimbabwe

Zambia

Kenya

Tanzania

Nigeria

Rest of Africa

Revenue


Middle East

Annual unit sales of SHSs in the Middle East are expected to grow from 12,442 units in 2014 to 77,035 in

2024, representing 0.2 MW and 2.3 MW of installed capacity, respectively. Annual revenue from SHS

sales is expected to increase from $3.1 million in 2014 to $13.2 million in 2024. In total, 400,003 units are

expected to be sold cumulatively between 2014 and 2024, representing 10.9 MW of installed capacity and

$75.4 million in sales revenue.


Appendix C: QA Stakeholder Survey

This appendix reports the quantitative responses from the off-grid solar products QA survey of 38

organizations active in the off-grid solar product domain as conducted by GOGLA and Navigant

Consulting with support from the Global Lighting and Energy Access Partnership (Global LEAP).

Qualitative responses to questions in the survey are not reported here while the anonymity of

respondents is also maintained.

C1. Survey Responses

Questionnaire - About You and Your Organization

Q1. Are you a representative of a…?

Manufacturer Distributor Investor or Banking Sector

Foundation or Development Organization

Other If Other

19 5 5 3 6 0

Q2. Please describe your position and job title - enter your answers into the response box below.

NA

Manufacturer50%

Distributor13%

Investor or Banking Sector

13%

Foundation or Development Organization

8% Other16%

Q1


Q3. Is your organization active in the field of… - enter your answers into the response box below.

Solar Lanterns Solar Home

System Kits (small solar

home systems sold as a kit)

Large Solar Home Systems

Off-Grid Solar System

Components

Appliances (e.g. TVs, radios,

refrigerators etc.) for use in

off-grid applications

Other off-grid electrification products and

services

30 31 16 13 15 16

25%

26%

13%

11%

12%

13%

Q3Solar Lanterns

Solar Home System Kits (smallsolar home systems sold as akit)Large Solar Home Systems

Off-Grid Solar SystemComponents

Appliances (e.g. TVs, radios,refrigerators etc.) for use in off-grid applicationsOther off-grid electrificationproducts and services


Q4. If your organization is active in product sales, please indicate how your products are being sold to

the end-user … - enter your answers into the response box below.

Direct sale Pay-as-you-go/energy as

service

Sales under a bulk purchase

agreement

Other If Other

19 9 19 12 0

Q5. If your organization is active in product sales please indicate the range of your annual turnover

concerned with the sale of off-grid solar products and associated appliances/components … - enter your

answers into the response box below.

<$1 Million $1 Million - $5 Million $5 Million - $15 Million Over $15 Million

8 7 5 4

Direct sale32%

Pay-as-you-go/energy as

service15%

Sales under a bulk purchase

agreement32%

Other21%

Q4

<$1m33%

$1m - $5m29%

$5m - $15m21%

Over $15m17%

Q5


Questionnaire on Quality Assurance

Q6a. If you are a manufacturer of off-grid energy products, do you currently certify your products under

the Lighting Global QA program?

Yes No

Lanterns 11 4

SHS 10 6

Q6b. If you are a distributor, do you currently prefer to procure products whose quality has been

certified under the Lighting Global QA program?

Yes No

Lanterns 5 2

SHS 4 3

If you answered yes, please indicate how strongly you hold this preference.

Slightly Medium Strongly Very Strongly

Lanterns 0 0 2 4

SHS 0 0 2 3

Q6c. If you are an investor or representative of a financial institution, would you have a preference to

invest in the production, distribution, or retail of products whose quality has been independently

certified?

Yes No

Lanterns 4 1

SHS 4 1



Lanterns 0 1 0 4

SHS 0 2 1 3

Q6d. If you are a government official, development agency representative, or work with a non-

government organization that seeks to enable activity in this sector, would you have a preference that

the quality of products sold in your country has been independently certified?

Yes No

Lanterns 7 0

SHS 7 0




Lanterns 0 1 4 2

SHS 0 0 5 2

Q7a. How significant a problem do you think low-quality solar lanterns are to the overall development

of the off-grid solar lantern market?

No significance Little significance Somewhat significant

Significant Very significant

0 0 5 12 17

Q7b. How significant a problem do you think low-quality solar home system kits are to the overall

development of the off-grid solar home system kit market?



0 2 9 8 12

No significance

0%

Little significance

0%

Somewhat significant

15%

Significant35%

Very significant

50%

Q7a


Q8a. How significant a problem do you think counterfeit or poor imitation solar lanterns are to the

overall development of the off-grid solar lantern market?



1 2 6 10 14

No significance

0%

Little significance

6%


29%

Significant26%

Very significant

39%

Q7b

No significance

3%

Little significance

6%


18%

Significant30%

Very significant

43%

Q8a


Q8b. How significant a problem do you think counterfeit or poor imitation solar home system kits are to

the overall development of the off-grid solar home system kit market?



1 10 7 5 7

Q9a. How significant do you perceive an effective quality assurance program to be to support the

development of the off-grid solar lantern market?



0 1 5 11 16

No significanc

e3%

Little significanc

e34%


23%

Significant17%

Very significant

23%

Q8b

No significance

0%

Little significance

3%


15%

Significant33%

Very significant

49%

Q9a


Q9b. How significant do you perceive an effective quality assurance program to be to support the

development of the off-grid solar home system kit market?



0 2 4 8 15

No significance

0%

Little significance

7%


14%

Significant27%

Very significant

52%

Q9b


Q10a. Please estimate based on your experience how much revenue growth in the solar lantern market

would be suppressed in 5 years from now were there to be no independent effective mechanism to

monitor and assure product quality. To answer, enter an X in the ranges indicated below that best

characterizes your estimate, where 0% indicates no negative impact on growth and 100% indicates the

market has no growth at all.

0% 0% - 20% 20% - 40% 40% - 60% 60% - 80% 80% - 100% 100%

2 9 13 4 1 1 0

7%

30%

44%

13%

3% 3%

0% Q10a0% (i.e. no negative impact ongrowth)

0% - 20%

20% - 40%

40% - 60%

60% - 80%

80% - 100%

100% (i.e. no growth)


Q10b. Please estimate based on your experience how much revenue growth in the solar home system kit

market would be suppressed in 5 years from now were there to be no independent effective mechanism

to monitor and assure product quality. To answer, enter an X in the ranges indicated below that best

characterizes your estimate, where 0% indicates no negative impact on growth and 100% indicates the

market has no growth at all.

0% 0% - 20% 20% - 40% 40% - 60% 60% - 80% 80% - 100% 100%

2 8 10 5 1 1 0

7%

30%

37%

18%

4%4%

0%Q10b

0% (i.e. no negative impact ongrowth)

0% - 20%

20% - 40%

40% - 60%

60% - 80%

80% - 100%

100% (i.e. no growth)


Q11. How useful is the current Lighting Global QA program in helping to demonstrate/improve quality

in the solar lantern market?

No use Little Use Somewhat useful Useful Very useful

0 0 4 12 15

Q12. How useful is the current Lighting Global QA program in helping to limit the room for counterfeit

or poor imitation products in the off-grid solar lantern market?

No use Little Use Somewhat useful Useful Very useful

5 7 8 3 7

No use0%

Little Use0%

Somewhat useful13%

Useful39%

Very useful48%

Q11

No use17%

Little Use23%

Somewhat useful27%

Useful10%

Very useful23%

Q12


Q13. What other mechanism(s) does your organization use to provide or support quality assurance for

off-grid energy products, and how relevant are they compared to the Lighting Global quality assurance?

Warran

ty sche

me

Cu

stom

er e

du

cation

thro

ugh

d

irect co

ntact (via d

istribu

tion

partn

ers)

Cu

stom

er e

du

cation

camp

aigns

Bran

d re

pu

tation

Affiliatio

n w

ith tru

sted

inte

rme

diarie

s (e.g. ve

sted

bran

ds/co

mp

anie

s; he

ad

teach

ers; farm

coo

pe

ratives)

Go

v’t insp

ectio

n an

d le

gal e

nfo

rcem

en

t

In-h

ou

se te

sting

Oth

er (sp

ecify)

More 20 16 8 17 13 5 7 3

Equally 7 6 11 10 8 4 10 2

Less 0 2 4 1 2 10 9 0

Q14. Are there aspects of the current Lighting Global QA program you would like to change or expand?

Yes No

23 8

74% 26%

0%10%20%30%40%50%60%70%80%90%

100%

Q13 More Equally Less


Q15. The Lighting Global QA program is currently partly funded through World Bank Group (IFC and

World Bank) donor funding and partly through testing fees levied on manufacturers. In a hypothetical

case where little or no donor funding were available several years from now and the contribution from

industry must be increased substantially in order to continue the QA program, how would you prefer

that a QA program be funded in the future?

a) from a fixed fee charged per product

certified

b) from a blend of a fixed fee per product certified and a sliding

fee based on the volume of product

sales by each respective

manufacturer

c) other - please explain in box below

If Other

12 11 9 0

38%

34%

28%

Q15

a) from a fixed fee charged perproduct certified

b) from a blend of a fixed fee perproduct certified and a sliding feebased on the volume of product salesby each respective manufacturer

c) other - please explain in box below


Q16. In the future, ownership of the QA program will need to pass from IFC/World Bank to another

entity. Please indicate your top three preferred governance options by placing 1 against your preferred

option, 2 against your second highest rated option and 3 against your third highest rated option.

Ind

ustry (i.e

. man

ufactu

rers)

All co

mm

ercial p

arties in

volve

d in

th

e su

pp

ly and

distrib

utio

n o

f solar-

po

we

red

pro

du

cts (i.e.

man

ufactu

rers, d

istribu

tors, an

d

oth

er re

levan

t sup

ply ch

ain

organ

ization

s)

Ph

ilanth

rop

ic organ

ization

s (in

clud

ing d

eve

lop

me

nt age

ncie

s

and

/or p

hilan

thro

pic fo

un

datio

ns)

A p

ub

lic-private

partn

ersh

ip

invo

lving co

mm

ercial e

ntitie

s, pu

blic

en

tities, an

d p

hilan

thro

pic

organ

ization

s (such

as de

velo

pm

en

t

agen

cies an

d p

rivate fo

un

datio

ns)

Pu

blic-se

ctor e

ntitie

s (e.g.

gove

rnm

en

ts)

Pu

blic-se

ctor e

ntitie

s (e.g.

gove

rnm

en

ts) and

ph

ilanth

rop

ic

organ

ization

s

Oth

er

First Preference

5 6 1 14 3 1 3

Second Preference

6 9 3 6 0 2 0

Third Preference

5 4 3 7 2 3 0

mailto:2@%20Second%20Preference

mailto:2@%20Second%20Preference


0

5

10

15

First Preference Second Preference Third Preference

Q16

Industry (i.e. manufacturers)

All commercial parties involved in the supply and distribution of solar poweredproducts (i.e. manufacturers, distributors, and other relevant supply chainorganizations)Philanthropic organizations (including development agencies and/or philanthropicfoundations)

A public-private partnership involving commercial entities, public entities, andphilanthropic organisations (such as development agencies and privatefoundations)Public-sector entities (e.g. governments)

Public-sector entities (e.g. governments) and philanthropic organizations


Q17. At the GOGLA meeting to discuss QA held in Cologne in 2014 four potential conceptual models for

the future management and focus of QA programs were put forward (see the end notes at the end of the

document). Please rank your preference for each of these concepts on a scale of 1 to 4, where 1 is most

preferred and 4 is least preferred:

Concept 1: Stay the Course (Third-party led, product certification and

market surveillance)

Concept 2: Modify the Course (Concept 1

without market surveillance)

Concept 3: Alternative Course

(Industry-led, product self-certification)

Concept 4: New Course (Hybrid

leadership, supplier

certification)

First Preference 25 4 3 2

Second Preference 2 16 8 1

Third Preference 4 5 12 4

Fourth Preference 1 1 6 18

0

5

10

15

20

25

30

First Preference Second Preference Third Preference Fourth Preference

Q17

Concept 1: Stay the Course (Third-party led, product certification and marketsurveillance)


Concept 3: Alternative Course (Industry led, product self-certification)



Q18. In your view, how likely is it that your organization would help to pay for the operating costs of a

future QA program in addition to certification fees assuming…

Not likely Somewhat likely Likely Very Likely

Preferred focus 12 7 6 2

Compromise focus 13 9 3 1

Not likely45%

Somewhat likely26%

Likely22%

Very Likely

7%

Q18 Preferred Focus

Not likely50%

Somewhat likely35%

Likely11%

Very Likely4%

Q18 Compromise Focus


End notes: The Four Concepts for a QA Organization Discussed at the GOGLA QA

Meeting Held in Cologne, 2014




a proven capacity and reliable track record). Two questions remain open for consideration:


medium term?




without the various technical assistance/knowledge services which currently are provided) in order to



over time leaving only quality certification and test method. Four questions remain open for

consideration:







Concept 3 suggests adding additional elements to the current QA framework, including both product-



questions remain open for consideration:




certification? What are the risks and challenges?



proposed approach?






during transition. Four questions remain open for consideration:





analysis of the potential future of the lighting global quality

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