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- Progressive Purchase: pricing solar for India’s unbanked
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Progressive Purchase: pricing solar for India’s unbanked
Background
The lack of access to end-user financing is one of the biggest obstacles to the spread of solar home systems to the 200 million energy poor households and small businesses in India. These consumers spend a large portion of their incomes on energy sources such as kerosene, and the banking system often doesn’t reach them because they own no land, have irregular incomes, or lack formal identification.
To address this problem, Simpa Networks has invented, built and field-tested a new pay-as-you-go pricing model for non-banking households. This “Progessive Purchase” pricing solution combines hardware that is embedded into a solar system, with software that enables a consumer to use mobile phone money or scratch cards to buy prepaid energy credits as needed. These function as payments towards the purchase of the system. The model is already used successfully in several informal settlements around Bangalore.
Purpose
To enable Simpa Networks to accelerate expansion of the Progressive Purchase pay-as-you-go model from Bangalore to six additional towns in Karnataka; prove its value proposition for possible India-wide upscaling
Main Activities
- Work with SELCO Solar Light to create four types of Simpa-enabled solar energy systems targeting homes and small businesses
- Partner with and train at least 40 existing payment agents to accept and process Progressive Purchase payments
- Test new flexible pricing models, incentives, and payment mechanisms in a pilot environment and then with live customers
- Install 1,000 new systems in un-electrified households in six towns of Karnataka during the 24-month project
- Develop client risk assessment and monitoring methods to build individual credit ratings
Expected Impact
- Solar systems provided to at least 1,000 non-banking, off-grid households who pay for energy as they go until they have purchased the system
- Estimated 8-10 years of free renewable energy for each household after the system is paid for
- Increased creditworthiness for non-banking households who establish a credit history with Simpa that can be shared with financial institutions if the customer requests
- Value of Progressive Purchase business model proved for possible wider roll-out across India
- Long term cooperation between Simpa and solar/consumer electronics manufacturers to develop DC powered devices such as TVs, fans suited to the customer base