PicoPV Costs

Costs

To assess the price-worthiness of PicoPV products available in the market today, and to get an idea of the price range for
which they will become a serious alternative for many end users, GTZ analyzed three dimensions of costs for a PicoPV lighting devices tested in the lab, namely:

• the initial investment, i.e. the lamp price,
• monthly cost, i.e. initial investment divided by lifetime,
• lighting service cost, i.e. initial investment divided by lighting output measured in kilo-lumen-hour.

Such relatively high initial investment costs will prevent a large-scale diffusion of PicoPV lamps among low income
strata for the time being, given their severely restricted household budgets (typically US$ 2-5 per month for lighting, with no buffer for savings) and lack of access to financial services. The initial investment ranged from (36 US$ to 120 US$).

In contrast, monthly costs are low (2 US$ to 9 US$, except for the poorest price performer) in comparison to running costs of kerosene wick lamps and candles (2-5 US$), not taking into account their inferior lighting output.

In terms of lighting service costs (0.10 US$ to 0.60 US$ per kilolumenhour), good PicoPV lamps perform much better than all traditional lighting alternatives, except for the kerosene pressure lamp (which in turn is as expensive in monthly cost and initial investment cost similar to most PicoPV products).

Due to the fundamental advantage of low lighting service costs, and in consideration of falling LED prices and increasing - and volatile - fossil fuel costs (further enhanced through carbon emission reduction targets), we expect this nascent market segment to take off massively over the next five years.

 

Price Trends

In context of initial investment costs, solar lanterns are generally composed of five major cost components. However, depending on the distribution margins and taxes, this prices are estimated to account for only for 30-70% of the price seen by the end-consumer.
The core components include: (1) the solar panel, (2) the battery, (3) the light source, (4) the charge controller, and (5) the lamp housing. While a breakdown of component costs can vary by design and manufacturer, Lighting Africa has compiled an averaged view below including 5 year projections

Additionally, kerosene, the main traditional alternative to off-grid renewable lighting, has long been an expensive commodity for the poor and is expected to continue increasing in price. Analysts forecast an average increase of 4% annually over the next five years. This, combined with increasing pressure on kerosene subsidies in Asia and Africa, will drive consumer demand for cheaper alternatives.

 

 

For detailed forecasts of component prices, see the full report of Lighting Africa: http://www.lightingafrica.org/node/191041