Authors: Richa Goyal (SERC), Arne Jacobson (SERC), Robin Gravesteijn (UNCDF)
Four out of every five Ugandans lack access to grid electricity . This constrains their opportunities for work, education, or operating a business. Around 35 million Ugandans, 97% of the population, rely on traditional and relatively inefficient energy sources such as wood, kerosene, fuel, and charcoal to cook their meals and light their homes. The poor are affected the most, since they spend a large portion of their family income on energy costs (approximately 13%, equivalent to $99 USD per year, according to a 2015 report by the Global Alliance for Clean Cookstoves 2015).
Over the course of their lifespan, solar off-grid energy solutions can help reduce the rural poor’s spending on energy services, while delivering superior lighting services as compared to traditional, fuel based lighting. However, the high first cost of solar products can impose a constraint for adoption of products. Financing off-grid solar energy systems is a promising market based solution to reduce energy poverty globally. The convergence of solar home system markets and technological advancements of mobile money and pay-as-you-go (PayGo) based financing models have shifted how off-grid energy products can be offered.
UNCDF’s CleanStart Programme, in partnership with SolarAid/Acumen and the Schatz Energy Research Center (SERC), is conducting research on energy adoption patterns, an examination of what some have called the energy ladder. The research seeks to determine how people finance their solar systems and the channels customers use to purchase them (e.g. cash purchase in the store, micro-finance loan, or mobile phone enabled PayGo finance). Additionally, the research will investigate the drivers of solar product adoption, particularly the role of flexible financing tools in influencing customers’ purchase behavior.
This blog series reveals some of the early outcomes of the study. Our first blog showed that dissatisfaction with traditional energy sources and the regular grid generates significant market opportunity that solar off-grid energy firms can potentially tap into. In this blog, we explore ways in which marketing and information sharing drive solar product purchase decisions of customers.
Exposure to Multiple Sources of Information
Not surprisingly, most solar end-users in Uganda were exposed to multiple sources of information before they purchased a product (see Figure 1). We asked 600 phone survey respondents about prior experiences and information that influenced them to purchase the off-grid solar products they owned. Collectively they mentioned a total of 875 information effects related to 726 products that they owned. Three information and marketing sources were particularly influential in driving end-user uptake.