The Market for PAYG Energy
The Present Landscape.
Globally, more than 1.2 billion people live outside the reach of an electricity grid. Consumers in this off-grid world spend hundreds of dollars each year to light their homes and power small electronics, and they do so using expensive sources of energy such as kerosene lanterns and disposable batteries. Modern options such as photovoltaic solar cost far less when amortized over time, but the comparatively high upfront price of these energy alternatives has kept them out of this enormous market.
In East Africa, a typical family spends heavily on lighting and cell phone charging—often 30% or more of their annual income:
$2 every week on fuel
≈ $100 every year
$0.25 every phone charge
≈ $25 every year
Mobile phone penetration: The mobile industry in Africa is booming. Over the past 10 years, the number of mobile connections in African has grown an average of 30% per year and is forecast to exceed 735 million in 2013. By 2015, the total number of mobile connections is estimated to reach 84% of the total African population. In addition to facilitating communication, this astonishing growth of mobile penetration is enabling innovative adjunct services in healthcare, education, and personal finance.
Mobile banking services: More than a billion people in emerging and developing markets have cell phones but no bank accounts. The informal networks for storing and transferring money that substitute for banks have high transaction costs and are prone to theft. In recent years, mobile banking (“mobile money”) is rapidly filling this gap by offering financial services over mobile phones. To date, there have been more than 100 mobile money deployments in emerging markets. In Kenya alone, Safaricom’s M-Pesa mobile money service processes more transactions domestically than Western Union does globally, and provides mobile-banking facilities to more than 70% of the country’s adult population, equating to over 14 million customers.
The Angaza Solution.
Angaza’s PAYG platform capitalizes on these trends in mobile phone and mobile banking infrastructure to remove the upfront price barrier to solar and other modern sources of energy. Accepting energy pre-payments through mobile money avoids the servicing costs of traditional loans, simplifies payment tracking for our partners, and streamlines the payment process for our end-customers. Data transfer over the cellular voice channel leverages the customer’s own phone to convey payment information to their PAYG-enabled solar device via the cellular network. This low-cost implementation of PAYG finally makes energy affordable to the massive off-grid market in the developing world.