You might think owning a solar company in a developing country is an easy ride until you own one.
Solar companies in developing countries face everyday challenges, but they still push to sail through and contribute to a brighter future where everyone has access to clean energy. In this article we are going to delve into the various challenges these wonderful companies are facing globally.
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We have written this article for three main reasons which are:
- Help raise awareness and spread the information to anyone interested in knowing the problems that solar companies in developing countries face daily. Maybe some people will help with solutions to these challenges
- Help those looking to start solar companies in developing countries such that they will know the challenges to expect. Maybe they can get prepared for it and find solutions in advance
- To help developing countries’ governments realize the challenges companies in their countries face. Maybe they can easily solve some of the challenges
Read through to understand challenges faced by solar companies in developing countries. Don’t forget to comment with extra problems you have realized in your country or possible solutions you think might help.
While you are, check how you can size your own solar system here.
Here are the challenges
1. Financing challenges
Lack of capital grapples solar companies in developing countries and their growth and existence. Like any other business there is need for capital to start and maintain a solar business.
The other financing challenge is that solar companies cannot extend financing mechanisms to end users when they themselves have no access to financing. Nowadays financing models such as pay as you go (PAYGO), power as a service (PAAS) and lease to own enables customers to have a solar system without the need to pay upfront. For such financing mechanisms to work solar companies have to be financed first or have access to financing.
2. Fake products
There has been an alarming mushrooming of fake solar products in the markets especially for developing countries. Fake products simply kill the markets by totally removing the end users’ confidence on solar products. This puts solar companies in developing countries out of business.
There has been concerns on intentional wrong technical specifications on some products entering the markets. This include some products declared to be lithium ion based battery products but only for them to last a few months if not days.
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3. Products not designed for developing countries markets
Some products are not designed for developing countries even though they are meant to be sold in developing countries. Developing countries have different requirements and electrical standards which in some cases are not obeyed when some products are designed. Culture, environmental conditions and way of living enhance the way products are used and if not taken into consideration during product design there is risk of many product becoming just products looking for use cases.
Many products are designed with the so called experts that have never been or lived in a developing country. Hence their products will be like designed in Mars but to be used on Earth. And this reduces the uptake of such products and reduces end users’ confidence on solar systems in general.
4. Skills shortage
Many fly by night solar company owners masquerading as solar experts do not really have the skills to take the sector forward in their respective regions. Proper solar energy skills from installation to maintenance are vital for perennial existence of solar energy business.
5. New technology
The fact that solar is a new technology means that less people understand it. This is even magnified when it comes to end users. There is need for awareness on use of solar systems to solve this problem.
6. Lack of in-country structures
This is where associations and proper government channels on solar systems or renewable energy in general come into play. Many countries do not have a renewable energy policy or master plan hence it will be difficult to see promotion of renewable energy systems like solar energy in such countries.
Renewable energy associations or specifically solar energy associations can play a pivotal role in combined efforts for local promotion of solar energy. For example it is easier for an association with proper structures to lobby the government to incorporate renewable energy policies than it is for an individual person or solar company.
7. Unsupportive government
Governments in developing countries usually turn a blind eye in promoting and crafting policies that enable people to use solar and go green. Ambitious targets with proper roadmaps are needed. This will help solar companies in developing countries to effectively contribute to going green.
8. Last mile distribution challenges
Getting the solar products to the final end user is a huge challenge in developing countries. End users are usually in remote and difficult to access areas. These areas usually do not have roads and mobile telephone network. In some cases people live in hilly areas.
9. Poor market
This is one of the challenges solar companies in developing countries face. People in developed countries usually live in poverty and therefore they cannot afford some of the solar products even if they also want to go solar.
10. Logistics challenges
It normally takes at least one to two months on average for solar companies in developing countries to import solar products for their local sales and distribution. Due to COVID 19 these timeframes have doubled and shipment costs more than doubled. All these costs are somehow passed to the end user and hence derail the uptake of solar systems.
11. High initial costs
Solar energy utilization as a substitute for power generation in developing countries has suffered significantly from the high initial purchase cost when compared to using traditional sources from power utility companies. As a result solar companies in developing countries find it difficult to push solar products.
12. Government subsidies
Government subsidies on fossil based electricity means reduce the uptake of renewable energy electricity. For example the cost of fossil based electricity in many developing countries is less than USD0.12 kWh which does not reflect the true cost as it is subsidized.
For an effective renewable energy penetration government subsidies must be reviewed especially for markets that have capable users.
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Keep following this page as we will soon publish ways of overcoming these problems faced by solar companies in developing countries.
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