• Saturday, June 15, 2024
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Pay Go Solar provides succour for Nigerians without grid connection

USADF, All On offer start-ups $100,000 in 2022 Off-Grid Energy Challenge

In a bid to eke out a living, 45-year-old Collins Odion runs a vulcanizing business in Magboro area, a community at the outskirts of Nigeria’s commercial capital.

A few meters away from him lay his most prized assets, a mobile phone connected to a portable green-rimmed solar panel lying on the ground facing the sun, a device he periodically uses to recharge his home solar system.

Magboro community is part of thousands of communities in Nigeria disconnected from the grid and its residents are among the over 80 million Nigerians without access to the electricity grid.

Odion and his other energy-poor cohorts are the new face of a growing alliance between renewable energy and fintech companies through a Pay As You Go (PAYG) model that allows solar companies to embed software into their solar-powered products. This allows consumers to invest in renewable energy systems through a series of small installment payments over a period time.

This development allows solar sales agents to register new client accounts through mobile applications, and consumers make daily weekly, or monthly ‘top-up’ payments for 6-36 months until they have completed the entirety of the payment plan.

“In the last 5 years, 30 million people have benefited from off-grid solar systems that were purchased directly through mobile phones, given the emergence of pay-as-you-go (PAYG) solar businesses,” Chioma Agogo, General Manager, West & Central Africa Partnerships at Greenlight Planet said in a note sent to BusinessDay.

Experts noted that if customers miss a payment, the PAYG technology’s ‘remote switch-off’ capability prevents the 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,” Agogo said.

Read also: Solar energy firm NXT Grid secures $1.4m funding to grow operations

BusinessDay findings show solar companies or fintech companies such as OmniBranches, Asolar Nigeria, Greenlight Planet, infibranches Technologies Limited, Lumos and several others scattered around the country are already fostering access and rapidly accelerating financial inclusion and electrification across communities in Nigeria and sub-Saharan Africa.

“This partnership between fintech and renewables is soaring in a way we haven’t seen in Nigeria before and will enable tens of thousands of new electricity connections,” Wiebe Boer, All On’s CEO told BusinessDay at the sidelines of an industry event recently.

Nigerian Solar companies providing PAYG energy services can reach large urban and rural customer bases, primarily by leveraging digital or text-enabled payment processing and customer service. Pay-as-you-go solar can also serve as a gateway to financial inclusion, a report by the United States Agency for International Development (USAID) said.

The report illustrates how a recent study estimates that 15-30percent of PAYG solar customers complete a mobile bill payment and create a credit history for the first time through the purchase of a solar home system.

“PAYG solar customers also generate over twice as much revenue per user for a mobile money provider than an average customer,” the report added. “This is a critical economic driver, as over 40percent of Nigerians are either business owners or in the process of starting a business.

Although the PAYG model is still at an early phase in Nigeria, a World Bank-backed Lighting International report shows the global sales volume of PAYG products grew by 30percent in 2019 with revenues growing even faster at 50percent driven by customers upgrading to solar home systems beyond basic products like solar lamps.

According to the global off-grid solar market report, PAYG companies represented just 24percent of the sales volume in the last six months of 2018, but accounted for 62percent of revenues.

The two strongest markets for PAYGO are Indonesia and Kenya, according to Lighting Global’s index, which looks at 71 factors across demand, supply and enabling environment. On that basis Sierra Leone, Mozambique and Angola were the weakest markets for PAYGO.

When it comes to demand Kenya and Uganda score high particularly when it comes to users’ “willingness to pay”, while Kenya also does well on the supply side along with Indonesia, driven by the availability of finance to support the sector.

While the report covers 24 countries across sub-Saharan Africa and Asia, it’s clear East Africa is the star of the show with more than 70percen t of the global PayGo market’s revenues.

In lighting global’s country focus on Nigeria, Africa’s largest economy, the demand for PayGo services is the highest of country’s covered because of the unreliability of the country’s existing grid and low electrification rates, especially in rural areas.

“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, there’s much more to explore,” Agogo concluded.