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 title, have irregular incomes, or lack formal identification.
But according to a report from the Renewable Energy and Energy Efficiency Partnership (REEEP), a company called Simpa Networks has invented, built and field-tested a new pay-as-you-go pricing model for non-banking households.
The pricing solution is called “Progessive Purchase” and combines hardware that is embedded into a solar system, with software that enables a consumer to buy prepaid energy credits as needed using a mobile phone.
These function as payments towards the purchase of the system. This model was successfully piloted in several informal settlements around Bangalore, with initial customers on track to complete the purchase within 12 months of installation.
A REEEP-funded project is enabling Simpa Networks to accelerate expansion of the Progressive Purchase pay-as-you-go model from Bangalore to six additional towns in Karnataka and prove its value proposition for possible India-wide upscaling. The actual implementation involves several different elements.
First, Simpa is working with SELCO Solar Light to create solar energy systems for homes and small businesses that are “Simpa-enabled,” i.e. equipped with integrated Simpa hardware.
Simpa is also reviewing its early version hardware and software to improve its user-friendliness. In late 2011, the company’s design team began to conduct post-sales interviews with Simpa-SELCO customers to analyze information on usage, identify areas of improvement, and to improve the sales and energy credit prepayment process.
Over the entire 24-month project, 1,000 new systems will be installed in previously un-electrified households in six areas of Karnataka.
The ultimate benefit for the consumer is that they will enjoy an estimated 8-10 years of free renewable energy after the system is paid for with Progressive Purchase credits.
Simpa is currently pursuing partnerships to support managing credit risk, linking Simpa's Progressive Purchase technology and platform with financial institutions, and jointly creating scalable structures for financing Simpa-enabled solar systems via Indian financial entities.
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