PAYGo & PULSE


In 2010 the number of people living without electricity was estimated to be about 1.2 billion. By 2019, this had been reduced to about 760 million. The most significant contribution to this reduction, was the installation of small solar systems, powering at village or household scale. According to the World Bank, about 420 million people currently get their electricity from off-grid solar systems. They estimate that by 2030, that number could increase to 800 million.

Unfortunately, such a metric hides more than it reveals. Having an electrical connection or even a solar panel does not necessarily imply access to electricity. On average, the sun is only available as an energy source about 12 hours a day. Energy access must also take into account reliability and affordability, and is most appropriately measured on a tiered spectrum, from Tier 0 (no access) to Tier 5 (the highest level of access).

Many people in emerging markets (and elsewhere) do not have enough money to pay for products in advance. Pay As You Go (PAYGo) models allow these users to pay for their products over time using technology enabled, embedded consumer financing. A PAYGo company typically offers a solar product, such as a solar home systems and multi-light pico devices. The customer makes a down payment, followed by regular payments for a term ranging from six months to eight years. Payments are usually made via mobile money, though alternative methods are sometimes available.

Productive use leveraging solar energy (PULSE) is defined as any agricultural/ commercial/ industrial activity that uses solar energy as a direct input to the production of goods/ services. PULSE enables/ enhances income generation by households/ farms/ microenterprises, often by mechanizing activities that would otherwise be performed manually or by providing additional hours of lighting in which to work. These activities and lighting might also replace non-renewable sources of energy, such as diesel generators or kerosene.

An especially important area for PULSE is for cold storage, refrigeration, and agricultural processing. This means there is a need for a large number of off-grid refrigerators, as well as products for solar milling. The World Bank, in its report, notes the need for specialized products for use in specific value chains such as poultry, dairy, and coffee. The PULSE segment is in its infancy, but has a potential for rapid expansion.

Key trends in emerging markets from 2020 onwards include: 1) Hardware manufacturing and design. Manufacturers are improving product quality, and developing brands for emerging markets; they are providing lower-cost products at consistently higher quality levels. 2) Software development. Software offers customizable and open architectures, that encourages PAYGo models and platforms. 3) Marketing and distribution. While large international companies are leveraging data to optimize sales and distribution, hardware companies are partnering with local distributors to reach previously underserved markets. 4) Consumer financing. PAYGo is encouraging innovation for payment systems. Companies are partnering directly with financial institutions to decouple consumer finance from their business models. 5) After-sales support. Remote monitoring is enabling companies to improve customer service and asset management. They are incorporating e-waste disposal considerations into business models.

The Chinese Belt and Road Initiative is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in nearly 70 countries and international organizations. Participants involve about 65% of the world’s population. Many of the countries participating are in emerging markets. Here, and elsewhere, Chinese manufacturers will sell higher-quality, self-branded products through local distribution partners and increasingly through their own distribution networks, including on PAYGo. This will increase the amount of high-quality, but lower-cost, products reaching these markets.

What should families in the developing world/ emerging markets do to obtain reliable supply of electrical energy? In many places, utilities (public and/ or private) are unreliable, while new solar panels are too expensive. From about 2010 to 2020, the obvious solution was to buy used solar panels. These panels become available because, in the more developed world, there is economic pressure to make optimal use of roofs and other surfaces, to produce as much power per surface area. This meant the regular replacement and subsequent sale of sub-optimal solar panels. Energy Bin has about 5 million pieces of photovoltaic equipment available on their site, and there are estimates that about 10 million used solar panels are available at any given time, on the global market.

The main source of information about this topic is: Off Grid Solar: Market Trends Report 2020.