Wednesday, September 30, 2015

Pay-as-you-go solar lighting systems slash household budgets

Corporate News


Leah Tallam charges her phone using the M-Kopa III home system in Eldama Ravine. Each battery-powered 8W system has three lights, a phone-charging facility and a chargeable radio. Georgina Goodwin/M-KOPA Solar
Leah Tallam charges her phone using the M-Kopa III home system in Eldama Ravine. Each battery-powered 8W system has three lights, a phone-charging facility and a chargeable radio. Georgina Goodwin/M-KOPA Solar  
By DAVID HERBLING, hdavid@ke.nationmedia.com

Leah Tallam is excited that one of her household expenses will be switched off at the end of this month: lighting costs.

The 42-year-old milk vendor said she is just about to finish paying for her M-Kopa solar kit, and is looking forward to enjoying free lighting, phone charging and power for her radio.

Ms Tallam bought M-Kopa Solar in September last year. She borrowed from her chama to pay the Sh2,999 upfront fee and has been paying the year-long daily instalment of Sh40 via Safaricom’s M-Pesa mobile money platform.
“After I clear my balance, we will no longer have to worry about cash for lighting or buying paraffin,” said the mother of seven who lives in Kampi ya Moto, a rural township located about 28 kilometres northwest of Nakuru.
She has been making payments in tranches of Sh200 which covers five days.
Presently, poor Kenyan households spend up to 10 per cent of their monthly income on energy, according a recent study by the International Finance Corporation (IFC).
The IFC study notes that turning to renewable energy sources in Kenya, especially solar, can increase the coverage of energy demand substantially, and potentially release funds for other domestic needs in the homes.
Buyers own the M-Kopa solar kit once they are done paying the daily fee of Sh40 over a period of 365 days through M-Pesa.
Ms Tallam said she previously spent Sh20 per day on kerosene for her two wick lamps. She further had to trek to the shopping centre to charge her phone, and had to buy dry cells for the family radio.
The solar battery-powered home system – which includes two bulbs, a phone-charging facility and a chargeable radio – has literally brightened her life and that of the family.
“The children are very happy. They can now study and do their homework under very good lighting,” she said.
She says she no longer has to shout zima taa (turn off the lamp) in order to save paraffin. “Sometimes my children could not do their homework because we would run out of kerosene.”
She also finds making the daily payments via M-Pesa to be convenient, as she can do it either from the comfort of her home or while doing her trade.
“This model avoids the high upfront costs usually associated with renewable energy systems since users pay for them in instalments over time,” said REN21, a Paris-based organisation hosted by the United Nations Environment Programme (Unep).
For Ms Tallam and thousands of east Africans using the solar-powered electric lights, the potential savings are huge.

Kenya is emerging as a global hub for mobile money-powered pay-as-you-go solar systems, ahead of other economies in the region.
Techies and entrepreneurs are combining solar and mobile money technology to help light up homes across East Africa, especially those in rural areas that lack access to the grid.
Only one in four households in Kenya is connected to the power grid. However, six out of every 10 adults has a mobile money account.
This makes Kenya and East Africa ripe for a mobile megawatts (MW) revolution which has so far attracted about a dozen companies rolling out different pay-as-you-go solar products powered by mobile cash platforms.
The players in East Africa include M-Kopa, Berlin-based Mobisol, British firm Azuri Technologies, Off.Grid:Electric, SteamaCo, Helvetic Solar and One Acre Fund, an international charity organisation.
Such mobile-powered solar schemes are crucial in lighting up off-grid villages, says a new report from former United Nations Secretary-General Kofi Annan’s Africa Progress Panel.
“New business models are emerging. Pay-as-you-go financing, mobile payments, extended repayment periods and low-interest credit serve the ‘bottom of the pyramid’ market,” reads the 2015 report.
London-based GVEP International says franchising and mobile credit for solar will help deepen uptake especially by poor households who can’t afford the cost of connecting to the national grid.
“The pay-as-you-go approach, similar to that of mobile phone top-ups, offers an affordable way to adopt clean energy,” says the non-profit which works with organisations in Kenya, Uganda, Rwanda, Tanzania and Senegal to increase access to sustainable, renewable energy options.
M-Kopa
M-Kopa, founded in 2011, last week announced it had already connected 250,000 homes in Kenya, Uganda and Tanzania to solar kits.
“Our pay-as-you-go solar model and our entire technology platform have been built around mobile money,” M-Kopa said in a statement.
In Tanzania, customers use Vodacom’s M-Pesa while in Uganda payments are made through either MTN mobile money or Airtel Money.
M-Kopa is the brainchild of Jesse Moore, Chad Larson and Nick Hughes – who helped develop M-Pesa, which currently has more than 13 million active users in Kenya.
The solar lamps are programmed in such a way that they automatically switch off whenever customers default on the daily payments.
Only one in every five households in the East African Community (EAC) has access to electricity, with a majority of citizens relying on paraffin and unhealthy options such as firewood for cooking and lighting.
Solar is also championed as clean energy. Smoke from wicks and firewood damages the lungs and eyes.
Mobisol kits
German firm Mobisol launched commercial operations in East Africa in 2013. Mobisol said it had installed more than 23,000 solar home systems in Tanzania and Rwanda as at July this year.
The company uses M-Pesa (Tanzania) and MTN Mobile Money (Rwanda) to pay for the kits under a 36-month instalment plan, and Mobisol said it targets selling another 25,000 kits by the end of this year.
When the system is paid off, customers own the kit which comprises 3-6 LED lights, lamp shades and switches, portable light, mobile phone chargers, a DC flat screen TV and decoder and a DC radio.
Mobisol said the home system buyers pay Sh7,904 ($75) as down payment and 36 monthly payments of Sh2,318 ($22) via mobile money platforms.
“We see the telecoms market and the solar off-grid market as highly connected and inter-related,” Mobisol said in an interview with the Business Daily.
“Mobile technology once again becomes an enabler of electricity access as it is through their phones that households can pay off the cost of their solar system making expensive and complicated money collection practices obsolete.”
One Acre Fund
One Acre Fund in 2011 began to offer solar lights to smallholder farmers in Kenya and has since expanded the scheme to Rwanda, Burundi, and Tanzania with trial programmes in Uganda and Malawi.
The Bungoma-based non-profit organisation supplies off-grid small-scale farmers with a range of solar kits, which they pay for from proceeds after selling surplus harvest.
“Without credit, the majority of smallholder farmers we work with would not be able to purchase a solar kit; they simply would not have the funds all at once for such a payment,” said Jenny Best, a spokeswoman for One Acre Fund.
Farmers make a pre-payment towards the solar kits and enjoy a flexible repayment schedule via mobile money. The solar kits range from Sh1,899 ($18) to Sh4,215 ($40) depending on size and capacity.
Most farmers pay a little bit each week at their in-person trainings and complete the remaining balance at the end of the harvest when they have more disposable income, Ms Best said.

One Acre Fund aims to double the number of households plugged to solar kits to 145,000 by the end of this year from 72,232 homes in 2014.
Switching to solar helps small-scale farmers in Kenya book savings of between Sh1,899 ($18) and Sh5,269 ($50) a year, studies by One Acre Fund show.
For smallholder farmers who live on less than a dollar a day, this is significant and can enable them to invest those savings in other critical needs, said Ms Best.
Helvetic Solar
Helvetic Solar began operations in 2007 and also offers pay-as-you-go lighting solutions across the region servicing households in Tanzania, Kenya, Rwanda, Burundi, Uganda, Nigeria, South Africa, Botswana and South Sudan.
The firm, owned by 30-year-old Tanzanian entrepreneur Patrick Ngowi, said it had connected a total of 485,000 households in both urban and rural areas as at end of June, 2015.
Mr Ngowi said Africa is ripe for an “exponential leapfrog adoption of solar solutions and mini grids.”
Helvetic’s solar kit comprises 6-8 LED lights and a phone charger. Buyers pay a deposit of Sh2,107 ($20) followed by 12 monthly mobile money payments at Sh1,053 ($10) per month. The payments are done through Airtel Money, Tigo Pesa, M-Pesa, and Equity Bank.
Azuri Technologies
Cambridge-based Azuri Technologies sees mobile money-powered solar as a commercially viable offering and says the model is compatible with the African rural economy.
“The physical autonomy of this technology allows it to operate in the market like consumer electronics,” Azuri said in an interview.
“It can be rolled out at the same speed and with the granularity of modern portable devices, long before major infrastructure projects have even left the planning phase.”
Azuri’s solar home system is offered in Tanzania, Kenya, Ethiopia, Uganda, Sierra Leone, Malawi, Zimbabwe, South Africa, Rwanda, Togo, and Ghana.
The kits comprise lights and a mobile phone charging unit. Customers pay a deposit of Sh1,053 ($10) deposit at installation then make weekly payments of between $2.5 and $3.5 for a period of 12 to 18 months.
This brings the total cost for the Azuri kits at between Sh13,701 ($130) and Sh18,971 ($180). The mobile payments platforms used depend on the country – Kenya (M-Pesa) Tanzania (Tigo Pesa), Ghana (MTN Mobile Money) and M-Birr in Ethiopia.

One Acre Fund aims to double the number of households plugged to solar kits to 145,000 by the end of this year from 72,232 homes in 2014.
Switching to solar helps small-scale farmers in Kenya book savings of between Sh1,899 ($18) and Sh5,269 ($50) a year, studies by One Acre Fund show.
For smallholder farmers who live on less than a dollar a day, this is significant and can enable them to invest those savings in other critical needs, said Ms Best.
Helvetic Solar
Helvetic Solar began operations in 2007 and also offers pay-as-you-go lighting solutions across the region servicing households in Tanzania, Kenya, Rwanda, Burundi, Uganda, Nigeria, South Africa, Botswana and South Sudan.
The firm, owned by 30-year-old Tanzanian entrepreneur Patrick Ngowi, said it had connected a total of 485,000 households in both urban and rural areas as at end of June, 2015.
Mr Ngowi said Africa is ripe for an “exponential leapfrog adoption of solar solutions and mini grids.”
Helvetic’s solar kit comprises 6-8 LED lights and a phone charger. Buyers pay a deposit of Sh2,107 ($20) followed by 12 monthly mobile money payments at Sh1,053 ($10) per month. The payments are done through Airtel Money, Tigo Pesa, M-Pesa, and Equity Bank.
Azuri Technologies
Cambridge-based Azuri Technologies sees mobile money-powered solar as a commercially viable offering and says the model is compatible with the African rural economy.
“The physical autonomy of this technology allows it to operate in the market like consumer electronics,” Azuri said in an interview.
“It can be rolled out at the same speed and with the granularity of modern portable devices, long before major infrastructure projects have even left the planning phase.”
Azuri’s solar home system is offered in Tanzania, Kenya, Ethiopia, Uganda, Sierra Leone, Malawi, Zimbabwe, South Africa, Rwanda, Togo, and Ghana.
The kits comprise lights and a mobile phone charging unit. Customers pay a deposit of Sh1,053 ($10) deposit at installation then make weekly payments of between $2.5 and $3.5 for a period of 12 to 18 months.
This brings the total cost for the Azuri kits at between Sh13,701 ($130) and Sh18,971 ($180). The mobile payments platforms used depend on the country – Kenya (M-Pesa) Tanzania (Tigo Pesa), Ghana (MTN Mobile Money) and M-Birr in Ethiopia.

Kenyan households spend about Sh900 per month on kerosene and a further Sh200 monthly to charge their mobile phones, a 2014 study by French business school HEC Paris showed.
Azuri says turning to solar can result in “significant savings” of up to Sh7,377 ($70) in the first year – a tidy sum especially to households earning minimum wages or less.
UK firm SteamaCo offers cloud-based remote metering and mobile payments system to help households pay for utilities such as solar and water.
It has operations in Kenya, Tanzania, Benin and Nepal and has already connected 1,000 homes and businesses to lighting and water.

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