The rise and role of platforms for inclusive, resilient, and sustainable local economic development have become crucial for Africa. To understand their contributions we explore the digital platform ecosystem in terms of value creation, operating model (forming partnerships), value capture, and how the energy transition is rising due to off-grid solar sector expansion and local economic development enabled by the platform economy. The scope of this exploratory research focuses on the most viable renewable energy market in Nigeria – the off-grid solar market and the research methodology is based on a painstaking review of academic literature, industry reports or grey literature, project publications, and news articles. The overall objective is to explore the Off-grid solar sector in Nigeria alongside local development initiatives with a special focus on the role of the platform economy, partnerships, and sustainable business models in the off-grid solar market. Platforms operationalized as a business generally explain how they leverage digital technologies to facilitate interactions and the creation and exchange of values like transactions & innovation platforms. On the other hand, partnerships in this context explain how platforms as business models foster network building and partnerships like ecosystem engagements. Findings reveal that the impact of digital innovation platforms is based on business model development – value propositions, off-grid solar sales growth & adoption, and key partners and inclusive business models like Pay-As-You-Go (PAYG) models. Finally, as platforms continually evolve the market potential of off-grid solar to solve the energy crisis and regional development can be largely attained.
Platform ecosystem, Innovation platforms, renewable energy, off-grid solar, partnerships.
In Nigeria, 43% of the population have no access to grid - electricity. This means that 85 million Nigerians are not connected to and cannot receive electricity from the Nigerian transmission grid amounting to economic losses estimated at 10 trillion ($26 billion) the country's 2022 proposed budgetary revenue (Stears Solar Market Report, 2022). Businesses and households commonly face economic losses as a result of the productivity and output losses and the increased spending involved in maintaining alternative energy sources like diesel and petrol generators as well as impending subsidy removal and fuel scarcity making Nigeria one of the largest potential markets for stand-alone/off-grid solar (SAS) globally. Access to affordable, reliable, sustainable and renewable energy (SDG 7) is generally viewed as an essential requirement of sustainable development that presents opportunity to raise household savings & incomes, and businesses & industry productivity and profitability. Expanding access to Off-grid solar significantly contributes to local economic development in terms of economic impacts gained by individuals, households and firms from the generated capacity of solar energy systems. For households who are the largest consumers of energy, using an estimated 68% of all energy consumed, access to affordable Off-grid solar allows them to engage in new economic activities and increase savings from higher costs spent on fossil fuels (Radley & Lehmann-Grube, 2022; Stears Solar Market Report, 2022).
The aftermath of the COVID-19 pandemic has also presented both challenges and opportunities for economic sectors, in particular the Off-grid Renewable Energy Sector, on one hand owing to decline in sales, poverty - fall in households and SMEs income, and on the other hand, leveraging on digital transformation. In both developed and developing countries like Nigeria, digital platforms increasingly help to connect buyers to sellers, companies to new potential markets/customer segments thereby enabling connectivity, supply chain, digital payment services, energy access, and identity systems. Although these transformations are taking place quite unevenly, but they spread rapidly and getting more profitable because of economies of scale & favourable market landscape. More importantly, improved access to Off-grid solar energy products like solar home systems can serve as a strong hope and base for socio-economic growth and development (Smith & Urpelainen, 2014). While the OGS market growth rate in Nigeria begins to stabilise as a mature market for OGS in the sub-Saharan Africa, platforms have enormous potentials to boost OGS sales penetration to reach a larger share of the total addressable market, resolving the electricity crisis significantly while making sure no one is left behind. Access to affordable, reliable, sustainable, modern energy for all can create and enable achievement of local economic development with regard to inequalities, living conditions of people, employment opportunities and promoting economic growth.
The overall objective of this study is to explore impact of digital & innovation platforms and partnerships formed as part of platforms business models contribute to off-grid solar adoption, off-grid solar energy transitions, and inclusive local economic developemnt. Platforms are also analysed based on two thematic areas, as both a business and business model. Platforms as a business addresses how platforms generally leverage technology to disrupt, build and exploit user networks for value creation, facilitating interactions through communities and capturing value in return for those interaction. Moreover, this study focuses on transaction platforms like e-commerce, and innovation platforms (that generally take the form of an innovation ecosystem).
Platform ecosystem and emerging Off-grid Solar business models
David-West et al., (2018) posit that research on platforms though nascent with limited literature is really gaining attention. However, there is little empirical studies on the relevance and roles played by platforms in driving local and regional economies, as well as broadening in-depth understanding of platform ecosystems as economic enablers within the African context. Off-grid solar companies in Nigeria operate based on different business models and such business models are categorised in different ways mainly manufacturing – manufacturers and vertically integrated companies, partnerships - distributor & financing models, and value chain specialisation – tailored solutions/services providers like payments collection, after sales, consumer financing services etc. (Lighting Global et al., 2018; Signify Foundation and Intellecap, 2019).
Platforms have proven to be more effective as drivers of economic productivity in different ways through the digital transformation of business processes, products, services, and efficient use of limited assets, thereby, reshaping global value chains (Umukoro, 2021). David-West & Evans, (2016) argues that platform definitions have been described in literature based on their range of attributes, which represents four types of platforms: transaction platforms, innovation platforms, integrated/hybrid platforms and investment platforms. All of these platform types have contributed enormously to the expansion of Off-grid solar energy in Nigeria. E-commerce platforms and online marketplaces like Alibaba, Jumia, or Jiji are the most common examples of transaction platforms relevant for SMEs in the off-grid solar market (Bartczak & Łobejko, 2022; International Labour Organization, 2021).
Successful examples of innovation platforms have developed Application Programming Interfaces (APIs), Software-as-aservice players (SAAS) & open interfaces in the Fintech space, and the growth of digital payments such as Pay-As-You-Go. More importantly, PAYGO model platforms has greatly increased OGS sales for customers who are unable to make outright purchases and base-of-the-pyramid markets through the use of mobile money, lease-to-own, mobile airtimes, proprietary PAYGO, partnerships with Angaza PAYGO metering among others (David-West & Evans, 2016).
Platforms in the off-grid solar sector and local economic development
Gawer, (2021) posits that there is consensus in management, economic and regulatory literature that platforms use digital technologies to generate interactions among users, creating network effects within the system, while gathering and using data generated from the interactive network. In other words, platforms rely on digital technologies establish network effects and for value addition to the networks such as data analytics, payments systems, information security control and user recommendations etc. Pike et al., (2017) also elaborated on the definition of local and regional development as a set of policies and actions designed to build up the economic capacity and enable improvement in the future economic performance of a local or spatially defined area for the quality of life for all. In this literature review, we consider the top-down approach to local and regional development that is based on sectoral development process (Off-grid Solar sector) that involves development of entrepreneurial projects (platform businesses and emerging business models) that fosters economic activities.
Digital platforms especially transaction platforms that were explored as case studies – Selco Innovation Platform, India & Smarter Grid International (SGI) PAYGO model, Nigeria, not only provide evidence that leveraging digital platforms in the off-grid solar sector has increased sales of OGS products, but proofs that market visibility and the market potential of the OGS solar sector can be greatly achieved. This assertion is drawn from two perspectives, first digital platforms have the capacity to create engagements with different customer segments and as well as people at the base of the pyramid primarily by offering value-added services that addresses their basic needs through financial services like PAYG models, and additional benefits that addresses their secondary needs like entertainment, household amenities, insurance and improvements in living standards. In addition, digital platforms are also able to address unmet needs for billions of people across the globe at scale. Such unmet needs include electricity access gap, poverty, mobile or digital connectivity, payments, and lifestyle.
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