Thursday, 1st June 2023

When mobile meets pay-as-you-go solar energy in rural Africa

By Sponsored
15 December 2021   |   10:59 am
In sub-Saharan Africa’s most developed telecommunications and mobile money markets, an unlikely friendship is emerging between distributed energy companies and mobile network operators (MNOs).

By Chioma Agogo, General Manager, West & Central Africa Partnerships at Greenlight Planet.

In sub-Saharan Africa’s most developed telecommunications and mobile money markets, an unlikely friendship is emerging between distributed energy companies and mobile network operators (MNOs).

Distributed off grid solar companies design, distribute, and in many cases, finance, solar powered energy systems for homes and businesses that are not connected to the electricity grid or have unreliable access to electricity. Without access to the grid, households and businesses have to search for other means to access power for light, mobile phone charging, entertainment, and other essential appliances. This need is greatest in rural and peri-urban areas where grid connectivity and consistency are limited.

While MNOs don’t generally operate in the energy sector, in sub-Saharan Africa, they share a large portion of their consumer base with off-grid solar companies: more than 400 million mobile subscribers who are off-the-grid. These under-electrified mobile phone owners rely on their phones to remain connected to family, to trade produce and goods, to make payments and receive money, and to access important information and entertainment, yet many of them lack the ability to simply charge their phones’ batteries at home.

Making energy affordable through PAYG technology
In fact, in the last 5 years, 30 million people have benefitted from off-grid solar systems that were purchased directly through mobile phones, given the emergence of pay-as-you-go (PAYG) solar businesses. PAYG solar companies embed software into their solar powered products that allows consumers to invest in the renewable energy systems through a series of small installment payments over time. PAYGO solar sales agents register new client accounts through mobile applications, and consumers make daily, weekly, or monthly ‘top-up’ payments for a 6-36 months until they have completed the entirety of the payment plan. If customers miss a payment, the PAYG technology’s ‘remote switch-off’ capability prevents use of the product until another payment is made. Many of these PAYG transactions take place through mobile money payments between the consumer and the PAYG solar provider.

This pay-as-you-go business model is emerging as a front runner in the energy access world, given how comprehensively it addresses affordability challenges and how quickly it’s accelerated the pace of electrification in a few key markets in sub-Saharan Africa. It also represents the root of the blossoming relationships between MNOs and distributed energy companies.

The PAYG solar- mobile synergy
Mobile technology can play an essential role in improving access to essential energy services for under-electrified populations. Mobile money, for example, allows households to make payments for their solar home systems without having to leave their homes. Similar patterns can be extended for other essential needs, beyond energy, such as water, satellite or cable TV services, etc. ensuring mobile money becomes part of even more clients’ daily lives. The impact of PAYG solar on the uptake and use of mobile money is larger than originally expected, and ultimately could become a major driver of financial inclusion, particularly with under-banked consumers.

In sub-Saharan countries, where mobile phone use is growing, access to electricity to charge those devices is a necessity. In off-grid areas, mobile phone use presents a challenge: mobile phone owners regularly travel a few kilometres to charge their phones for a fee. Intermittent use of phones, to conserve power, denies many people the full benefits that come with using a mobile phone, including increased economic activity, banking services, information, and reduced travel time. With access to solar home systems, these consumers can charge their phones at home, without additional fees, and enjoy continuous use of their devices.

Opportunities for the growing partnership between telecom and PAYG solar
In the future, growing partnerships between MNOs and energy product companies may hold further promise for rural consumers, enabling them to access financial products, assets, and services not currently available.

Payment patterns from the purchase of PAYG solar products can serve as credit histories for underbanked individuals and qualify them for additional products and services in the future. With regular and consistent payments PAYG companies and MNOs are enabling, off-grid, predominantly unbanked consumers to access formal financial services.
Product companies often struggle to stay in touch with their large customer base. Yet, remote communication with customers can inform the development of new products and services and products, provide customer-support and troubleshooting services, and enable cross-selling and upselling of existing customers.

The confluence of the PAYGO companies and MNOs is a potential gateway to essential services to a market segment that has traditionally been overlooked. Although these industries have only recently begun working together, and there’s much more to explore, such collaborations represent an expanding world of possibilities in increased financial inclusion, energy inclusion, and the distribution of widespread mobile based services.