PRIME Project Energy Team Solar Energy Product Market System Assessment Report
Name / OrganizationPrepared by: / TizitaAfework (Team leader) / MC
AynalemTassachew / SOS-Sahel
KassahunMamo / HU
Mohammed Seid / MC
Mohammed Ousman / MC
May 28, 2013
Section 1: Executive summary
The solar product market system assessment has been conducted at Eastern, Afar,southernclusterns of the prime intervention areas and market hubs in the center and boarder areas. For this assessment,interview,observation and meetings are used as a means of tools for data collections. The collected data has been analysed both qualitatively and descriptively.The analysis result showed that the solar product market actors’ capacity and performance is weak;the sector has both demand and supply side constraints and if the market is developed, it has a potential to enhance the pastoralists and agro- pastoralist resilient capacity.Finally, the solar product market system is young and requires systematic and integrated intervations including those mentioned under the recommendation section.
Section 2: Context
The solar energy productsmarket system assessment, which is conducted from May 07 to May 24, was envisage to analyze the current status of the sector and to take the lesson for future prospects of the sector. This energy sector is in a very infancy stage in Ethiopia. Due to this and lack of formal education that incorporates solar energy source and its functional products at school and higher level, the knowledge is very limited towards the sector and its products for the majority of stakeholders, who are involved in it.
This market system analysis is primarily targeting the pastoralist and semi pastoralist community, who have less than 15% of their population have access to grid electrification. By their basic nature this community is located sparsely and mobile that hinders the provision of village level services like health, elder education, mobilization of social capital. It is also very difficult to access basic infrastructure like health,education, road and the like.
During this analysis the very motto of “market has no boundary” has taken into account. Though the PRIME intervention areas are confined in the pastoral and semi-pastoral areas of Afar, Somali and Southern Oromia of Ethiopia, the assessment considered the central solar product market (Addis Ababa), the nearby big marketsof the pastoralists in the PRIME intervention area outside of their territory (Hawassa, Bullehora, Dilla) and more importantly the main sources of smuggling route of solar energy product, which are Togo Wuchale of Somaliland and Gambo of Kenya, are covered during the assessment.
Section 3: Methodology
The assessment begins by reviewing secondary data sources and other similar assessments. The different assessment tools are used that include: personal interview, discussion with key informants, meeting with higher institute scholars that have prior information about our subject of study, telephoneconsultation and telephone interview and personal observation of market situation.
The actors involved in the interview comprised of government and NGOs official who are working in both field office and at their head offices, importers, retailers and microenterprise owner at local level (list of key actors interviewed is annexed). The interview has made by a team composed of five members from relevant institution, NGOs and University’s (Mercy corps, SOS Sahel, Pastoralist concern and Haromaya University) who are working on renewable energy access, natural resource management and livelihood research activities and having humble experience in pastoralist area intervention programs/projects respectively..
Major area visited during the assessment includes central market at Addis Ababa and Hawassa (13 Importer/wholesaler) and 16 retailers, 6 energy related office, two NGOs (COOPI and SNV) in each cluster and border market hubsof Somaliland and Kenya (Togo Wuchale and Gambo) were areas visited. In addition, assessment has made in each clusters of the PRIME intervention areas i.e
east cluster includes Jigjiga, Diredawa and Harer
Afar cluster (Samara University and the regional mineral and energy office and Gedamaytu) and
Southern cluster Negelle and Moyale).
Language barriers during Afar cluster visit, unwillingness to respond, absence of respondent after appointment is arranged and fear of providing confidential profile of their business were among issues that challenge the team during data collection.
Section 4: Selected market systems
Based on understanding of the lack of access for clean, affordable and sustainable energy resource for rural households of the county in general and for pastoralists/agro-pastoralists living in remote areas of the country in particular, among other renewable energy resources, solar energy products market system is selected by EMMA team for assessment. The decision for selection of this market system is based on the following criterion;
The market system significantly relates to protecting and promoting the livelihood of pastoralist/agro-pastoralist households & communities through decreasing expenditure on in-efficient energy resources.
Strategic relevance to the PRIME project for creating new jobs & income generating activities for both women and youth in pastoralist areas.
Positive environmental impact (by decreasing the GHG-emission that would result from burning fossil/wood fuel
Positive impact for improving women’s, mothers & children’s health condition through decreasing the impact of respiratory infections due to Indoor Air pollution by black carbon.
Section 5: Market –System Maps
The market map below covers the distribution channel of solar energy products and services starting from the importers through the final users in the market chain. The dark lines in the middle of the map that intertwines the key market actors of solar product market system. The legal routes that use to transit the mentioned product are from the international market to the importers/wholesalers to end users (Households and institutions, which include health post, schools, churches and mosques) either through retailers or directly. The other legal route of this market system includes the flow of solar energy products from the international market to importer/wholesaler then purchased by rural cooperatives to distribute for the end user.
Another feature of this market system is that it includes illegal import by smugglers as is depicted below. The main end user of the product comes through this routare households.
To support this chain there are governmental actors, financial institutes and local and international NGO as it is depicted below.
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Table 5.1 SeasonalCalander
market System (Solar energy) / Sep / Oct. / Nov. / Dec. / Jan. / Feb. / March / April / May / June / July / AugustIncome from Livestock / LOW / HIGH / LOW / HIGH / LOW
Price of the product
Income from Farming / LOW / HIGH
Income from gum and essence / HIGH / LOW / HIGH
Religious Festivals / These can lie in any months of the calender and during the occurance the demand of consumption goods and services are high.
Cultural Festivals / HIGH / High
Income from Dairy / HIGH / LOW / HIGH / LOW
Income from Labor / LOW
Road / FLOOD / FLOOD
The main factors which affect the solar market system at pastoralist and agro-pastoralist community include: income from livestock, income from dairy, income from farming, income from gum and essence, income from labour, religious and cultural festivals and infrastructure.
The income from livestock is high during the first month of the dry seasons and low during the driest months of the year. In the remaining months of the year, the income from livestock is expected to medium. The income from livestock products (dairy) is high during the rainy seasons and low during the driest months of the year.
Income from gum and essence is high during the driest months of the year and low during the rainy seasons of the year. The income from farming is high during August and July and it is low during January and February.
The religious festivals may lie at any months of the year and can affect the solar product market at any months of the year. The cultural festivals are conducted during the month of November and may at the Borena and Guji and their influence is high while it does not have influence at the Afar and eastern clustern.
Section 6: Key findings – Results of the Solar Market Analyses
6.1 Key features of solar product market system
More of institutional focused
The coverage of solar product at the pastoralist areas is very low. Even the currently installed few solar products are mainly focusing on institutions like schools, health centers, churches and mosques. The typical example for the above statement is the Afar region case: there are 29 district out of 32 districts of the region have got institutional solar products, 29 schools (one from each district) has got solar energy access with the help of federal rural electrification fund and GIZ but there are no solar products at house hold level.
Unstable rules and regulations and its execution
The rules and regulations set at custom and revenue authority for taxation of imported solar product changes from time to time. Sometimes some of solar products who have got certification from lighting Africa are duty free and sometimes they may be charged.
Limited capacity of stakeholders in the market systems
In the regional, Zonal and district market: as per the site visit and information from regional, zonal and district level, the capacity and performance of the market actors and availability of solar products are poor/negligible at Afar and southern cluster (Borena and Guji Zones). On the other hand, at eastern cluster and its nearby (Somali,Harer and Diredewa), the availability of solar products, the capacity and performance of market actors are relatively better.
It doesn’t have wide coverage (particularly for pastoralists)
Since the capacity of different actors to supply solar products at pastoralist level is low; accessibility of the solar products from main market chain is restricted; the technology is new and requires special skill; the coverage of solar product at pastoralist community is very low.
Excess demand of the product in the market system
At off grid pastoral community, households and institutions have responded that they are highly interested in solar products than fuel generators for household lightning, school power supply, mobilescharging, barbering and health centers if the product is available nearby and some credit service is facilitated through financial institutions. The typical evidence for such case is the assessment at Das pastoralist association of BoreboreWereda of Borena zone and interview results from Guji zone mineral and energy office officers.
Lack of awareness on the product in the society
Since the technology of solar products and solar energy market is young, the society afraid in buying and using the technology even if they have a demand for the service. In addition to the avove the promotional strategies of solar product suppliers have different barriers, like language, literacy and outreach barriers to minimize the awareness problem.
No or poor market information at zonal, district and pastoralist level
Many of the pastoral customers are located at off grid electric systems and remote locations. Therefore, they do not have any information from where they can buy solar products even if they demand it. Even the district and zonal level, the energy and mine office staffs who are responsible for informing the pastoral community about the solar product market also have very little information.
It lacks hard currency to import the product in bulk
All the solar products are being imported from different countries especially from Japan, Germany, China, Thailand etc. For importation, getting foreign currency (hard currency) is the main problems the importers are facing at the central market. The foreign currency problem not only affects the amount of solar product imported but also the time it takes to import the products to the country.
Smuggling has a role in the solar market system and solar products which come through smuggling routes are more accessible and have more competitive price advantage for the pastoralist.
The pastoralists located at the intervention and/or assessed areas are located at remote places which are close to the border of the country. The smuggled solar products which cross the border illegally and reach the nearby towns are the market places for pastoralists and the typical examples are Harer,Jijiga and Diredewa (mainly through Togo Wuchale of Somaliland) and Moyale (through Gambo of Kenya).
Lack of financial services at regional, zonal and district level
At the assessed regions, zones, districts and pastoralist associations, all the respondents confirmed that there are no financial institutions neither support solar product market system by giving credit service to retailers nor provide credit services to pastoral income generating groups or households.
6.2Base line analysis of Solar Products Market System
6.2.1 Assessment of the existing market-systems’ capacity and performance
6.2.1.1 Supply Market System
The assessment of the existing market-systems’ capacity and performance has been done in supply market-system at three different economic scale level. These three economic levels include:
The central market,
The regional, zonal and district market and
Pastoralist associations (PAs) market
Central Market: as per the information collected mainly from Importers/wholesalers, the availability of solar products, which range from small house lanterns to big institutional multipurpose solar panels, is good. Also, the capacity of the main market actors (Importers/wholesalers) is adequate to respond to the procurement needs of the target population at central level but the performance of the market actors is poor due to supply constraints and other reasons.
Regional, Zonal and District Market: as per the site visit and information from regional, zonal and district level, the capacity and performance of the market actors and availability of solar products are poor/negligible at Afar and southern cluster (Borena and Guji Zones). At eastern cluster (Somali,Harer and Diredawa), the availability of solar products, the capacity and performance of market actors are relatively better than Afar and southern clusters due to the presence of smugglers who smuggle solar products.
In the Pastoral Associations (PAs) Market: as per the information collected and site visit conducted, the availability of the solar products, the capacity and performance of the market actors are nil.
6.2.1.2 Income Market System
The income market system is not conducted under the energy sector but it has been handled by other sectors who have worked on different economic activities that bring income to the community. Therefore, the income market system has to be analysed as a cross cutting issue with other sectors to have a detailed information whether the income market system creates earnings to the Pastoral associations by purchasing their produce to fulfil their renewable energy demand through solar product or not.
6.2.2 Market Integration
Since there is no adequate data which shows detailed price pattern of solar products over time, information through interview from key actors (local, regional and national traders) is used to assess the market integration of solar products.
The questionnaires used to assess the market integration through interviews include the following.
Where the main trade of solar products flows normally comes from or goes to?
What proportion of solar product is manufactured with in the country and what proportion is imported?
Are solar product’s price peaks and troughs normally coinciding with national ones?
Are there certain times of a year when transport is restricted /difficult?
Are there are other reasons why trade is restricted or market is segmented?
The response of the key actors (local, regional and national traders) for the above mentioned questions is summarized below.
The main trade of solar products normally comes from Addis Ababa and goes to regions districts, institutions and house holds by retailers or importers.
All solar products are imported through formal and informal procedure i.e there is no any solar product manufactured with in the country
Local price peaks and troughs do not coincide with national peaks because the solar product market system is not well functioning