The Fijian Competition and Consumer Commission and the Australian Government’s Market Development Facility (MDF) recently published findings on a solar demand study that was designed to better understand current and potential demand for rooftop solar, as well as different market segments’ perception, knowledge, incentives, barriers, willingness and ability to pay for solar in urban areas, particularly in Suva.
Titled ‘Understanding demand for solar energy in Suva, Fiji’, the study interviewed about 5000 people face-to-face and online to gather the data.
The study states while the market for renewable energy generation in Fiji has existed for more than 40 years, the growth of this sector has been limited.
Despite Fiji’s ambitious renewable energy targets, the adoption of rooftop solar systems remains low. Although Fiji already generates a high proportion (50-60 per cent) of its energy needs through renewable energy (hydro, wind and solar), there is still interest in increasing the uptake of rooftop solar systems, said the study.
Current experiences with energy
The study found 72 per cent of households in Suva are paying energy bills of at least $50 per month, with 63 per cent experiencing power cuts once every two months on average. Due to these power outages, some households are already investing in alternative power sources, including diesel generators, solar and back-up batteries charged by the grid.
“This demonstrates that households are willing to invest significant amounts in back-up power even when this also increases their ongoing costs,” said the study.
Ninety-four per cent of households have experienced power cuts in various degrees of frequency and length, mostly once every two months (63 per cent). Households reported either “less than 2 hours” (40 per cent) or “between 2-6 hours” (44.1 per cent), meaning that over 80 per cent of the sample experience power cuts that are six hours or less.
Extreme weather events, such as tropical cyclones, were reported as frequently followed by prolonged power cuts.
The study said a quarter of households are investing in back-ups to grid energy due to outages.
The most common responses included diesel generators (60 per cent) and solar (32 per cent). Most of these solar back-ups are small standalone light products. One respondent has an uninterruptible power supply (UPS) battery for back-up power.
All responses to the amount paid for diesel generators ranged from $1000 to $40,000. Households also reported spending an average of $150 per year on running and maintenance costs for the generators, said the study said.
Household financing and information preferences
While 68 per cent of households who were willing to invest in solar systems preferred to use their own funds, a significant portion of the sample (50 per cent) were willing to explore loan products or subscription models to finance their system or were unsure of the kind of financial options available, the study found.
This suggests that there is a significant number of households who are willing to pay a deposit and take on debt or regular repayments to fund a solar system, suggesting an opportunity for innovative financial products to enter the market.
From the 2675 households who were willing to invest and able to install solar systems, 68 per cent would pay for a rooftop solar system with personal funds.
Eighteen per cent indicated a preference to access external finance such as a loan from a financial institution or family/friend.
The study found 12 per cent indicated a willingness to pay through a user subscription model.
Twenty per cent of households were unsure of the kinds of payment options available.
Households were asked which sources they prefer to receive information on new products and services. The three popular responses were social media, television, friend and family.
While digital means of communication are expected to receive the highest responses, it is notable that nearly 40 per cent also rely on word of mouth from family and friends for information on new products and services.
More than half of households surveyed had more than one answer to this question.
The study found this suggests product information would be shared through multiple avenues, with a focus on social media.
Customer testimonials from Fijian customers could be an effective means of building awareness on the benefits of investing in solar energy systems.
Current business experiences with energy
Business respondents reported paying energy bills between $146.50 and $30,000.
The study found businesses expressed significant concerns with power cuts, the most notable being loss of productivity resulting in brand damage and revenue loss, with example that were damaging reputation as a call-centre provider and causing them to almost lose major clients.
Businesses were investing significantly in backup energy to reduce the impact of these outages (both capital and ongoing operational expenses for diesel gensets).
The study found 90 per cent of the sample experienced frequent power cuts on their premises.
“The remaining 10 per cent were unaware of the power cuts, either because they just moved into the premises or just started working with the business. The businesses confirmed that they had a power cut at least four times a year (minimum), with some experiencing power cuts as often as once per week (66 times a year was the maximum),” said the study.
Of the 25 financial institutions registered in Fiji, MDF interviewed 13 institutions (including commercial banks and insurance companies).
Out of the 13 financial institutions interviewed, only four offered stand alone financial or insurance packages for solar products.
An additional two institutions indicated that financing or coverage for solar products can be included within their existing products. The study found the market for financial service related to solar products is still in its early stages.
There is a clear willingness for urban residents and businesses to explore investing in solar due to the potential for cost savings, reduced impact of outages and to reduce their environmental impact, said the study.
“Uptake has been low, however, due to obstacles including a lack of information on costs and benefits, high-upfront capital costs and limited financial products available in the market. Households and businesses need more information to understand the types of packages available for rooftop solar, potential costs and savings and pay-back periods to make purchasing decisions,” said the study.
Given current experiences with electricity, customer perceptions on solar and willingness to pay, there is a significant market opportunity to service urban customers, but the upfront capital cost remains a barrier, the study found.
