By James Noble
August 7, 2014
Getting energy to remote, poor, and rural areas is a major challenge. It is costly, difficult, and end-users can rarely afford to pay for new capacity. But new business models involving pay-as-you-go solar energy, distributed generation, and mobile technology could potentially change how the world gets its electricity.
Worldwide, over 1.3 billion people lack access to electricity. More than 95 percent of these people are in Africa or in developing countries of Asia, with millions more residing in off-grid rural communities in industrialized nations. Due to the high cost of grid extension to rural areas, 70 percent of energy needs will likely be met by off-grid renewable energy technologies.
Beyond the technological and political barriers confronting these rural communities, these communities also face financing often-high upfront costs of renewable energy technologies. Financing is not a problem for individuals and communities with long credit histories, but for those communities that have no credit history at all, finance becomes a major problem.
Enter mobile money, pay-as-you-go (PAYG) finance and distributed solar technology. Companies are now leveraging machine to machine (M2M) technology, which allows customers to pay for solar power when they need it and when they can afford it. And for the first time software providers can capture credit data for these populations, making them visible to the formal economy.
In Kenya, there are twice as many mobile phone subscribers as there are individuals connected to the grid. Entrepreneurs are looking to leverage mobile subscriptions and distributed energy generation to provide clean, renewable energy to remote communities that typically rely on kerosene or diesel fuel.
One company that recognized the opportunity is Angaza Design. Angaza provides a suite of online services to help technology distributors manage PAYG financing of solar energy systems. They also work directly with manufacturers to develop custom PAYG hardware solutions for the features of their product lines. As a result these products become “PAYG-ready,” which allows them to communicate and activate/deactivate depending on the customer’s payment status.
By fostering networks and sharing information, PAYG system technology is showing that off-grid solar for rural customers can be bankable and profitable. As a result, making solar financing accessible to customers is the best way to get electricity into the hands that most need it. Beyond the benefits of clean, affordable technology, PAYG provides poor, rural customers with a formal credit history, which in the long run improves their development opportunities.
Photo Credit: DIVatUSAID