Solar power: In small doses

THE business of promoting solar energy in the developing world has become a lot brighter since the days of merely selling solar lanterns to the poor. Many firms that started off by marketing portable devices with small photovoltaic panels to…

THE business of promoting solar energy in the developing world has become a lot brighter since the days of merely selling solar lanterns to the poor. Many firms that started off by marketing portable devices with small photovoltaic panels to the 1.2 billion people who are not connected to a power grid have realised that solar is not just about running a light bulb, but also about creating electrical systems for households and finding clever ways to finance and maintain them.

Household demand has switched to other things, not least to charging mobile phones. “There are more mobile phones than toothbrushes in the developing world,” reckons Ryan Levinson, the chief executive of Sunfunder, a start-up based in San Francisco that helps solar companies raise financing. Cash-strapped customers usually cannot afford the upfront costs of a full household solar-power system, so firms have innovated by offering financing for smaller systems. M-KOPA, which is based in Kenya, sells solar “home systems” that include solar panels, three lights and a cellphone charger, for around $200. The firm, which was founded by the folks who pioneered M-PESA, Kenya’s popular mobile-money platform, is as serious about its payment model as it is about providing the hardware, says Chad Larson, its head of finance. M-KOPA’s customers can pay as little as 50 cents (40 Kenyan shillings) a day to keep their solar-powered devices running. After 360 days they have usually paid off the entire cost of the system.Azuri, based in Cambridge, Britain, has sold more than 20,000 systems in east Africa using micropayment financing. Angaza, in California, has built an entire pay-as-you-go payment platform for solar devices. And Living Goods has tried another marketing tactic: customers get a free trial of a solar lamp. More than 60% of the trials, says the firm, have turned into sales. It, too, accepts payment in instalments.Solar systems are not worth much if they are not maintained, which can be difficult in rural Africa. If a device breaks it is often thrown away. But mobile technology embedded in its systems lets M-KOPA monitor them from anywhere on the globe. If the system is malfunctioning or someone is tampering with it, M-KOPA can disable it remotely. If people don’t pay their devices can be locked.All this is good news for the millions who have to live without electricity, but will it be good business? M-KOPA’s systems produce enough energy to power a mom-and-pop shop. The longer these stores can keep the lights on, the more business they can do.

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