DATABASE

Case study

Solar-as-a-service for the energy poor

ongoing



Country
India

Budget
500.000 - 3M $

Year
2011


Issue

Solutions

Link
simpanetworks.com


Abstract

Simpa Networks is addressing the mass market opportunity of unmet demand for energy services in rural India.


Project Description

Simpa sells solar-as-a-service to energy-poor households and micro-enterprises in rural India. Simpa has created, and successfully patented, a proprietary prepaid metering and mobile payments technology. The technology platform does three jobs: 1) creates a convenient pay-as-you-go experience for our customers; 2) reduces the transaction costs of collecting small payments from highly distributed customers. 3) mitigates the risks of serving large numbers of highly distributed, rural, energy-poor, often unbanked customers. The solar home system, named the “Turbo” product, typically contains 2-3 lights, a fan and 2-3 mobile charge points. The customers then pay per day to use the system, purchasing clean energy days from our payment agents. Simpa has been awarded a USPTO patent for its technology innovation. Simpa is now scaling up a commercially sustainable model for delivery of clean, reliable electricity. We are now present in 8 districts of Western UP since September 2013, and to date we have reached over 6,000 customers with our mainstream Turbo product. We have gained widespread acceptance in these districts from our current customers, who have a progressive mindset and are searching for a solution to their energy problems.


BENEFICIARIES

Our target customers live in poor-grid and completely off-grid areas in rural and peri-urban India. At Simpa, we target customers with a progressive mindset that are searching for a solution to their energy problems. Their incomes are typically in the range of INR 50,000 (US$ 830) to 150,000 (US$ 1,660) per year.


Results

Below are a few milestones illustrating where Simpa has reached in expanding our solar-as-a-service model in rural India since the launch of our new sales model in late 2013: • Added 6,080 total customers, providing clean energy service to 30,000 people of which 14,400 are women. • Launched 9 branch offices in 8 districts of Uttar Pradesh • Created 243 full time jobs, most of which are in rural India • Recruited and trained 100 contract solar technicians • Recruited and trained 3,000 village level entrepreneurs • Established a presence in 1,400 energy-poor villages • Created a Customer Care call center providing on-demand customer service 7 days per week. • Sold over 860,000 days of clean energy service • Displaced 85 tons of CO2 • Generated 65 MWh of clean solar energy • Completed the second phase of our three phase research study to evaluate the impact of our innovation on the target population


Business Model

Simpa’s innovation is a pay-as-you-go model that turns an expensive consumer product into an affordable service. We address the barriers surrounding trust, adoption and affordability by accessing the energy-poor through trusted, Simpa-branded, local Village Level Entrepreneurs (VLEs). Solar Technicians are dispatched to install solar home systems at customers' homes or businesses and customers then purchase "recharge" or top-up credit, available at multiple convenient payment points.


Lessons Learnt

Our experience shows that customers are willing and able to spend their incomes on pay-as-you-go products which eventually can lead to ownership of a solar home system. There is a market for distributed solar energy, as long as a trusted sales and distribution channel makes both the product and service accessible, affordable and reliable. Selling directly provides us with greater scope to communicate our innovative pricing model and also to receive feedback from the market about their broader needs. We have found that business models that deploy working capital to create social impact while returning the invested capital to create even more social impact are the most successful.


Key Feature

We target the massive mid-market, where profound customer need is combined with the ability to pay in increments over a 28-month operating lease period. Our key feature is our proprietary metering technology which allows for a pay-as-you-go payment capability, with eventual ownership of the system at the end of the lease. Our prepaid pricing model is deeply familiar and highly compelling: The Indian market currently holds 904 million mobile phone subscribers, with 95% choosing prepaid pay-as-you-go pricing. Targeting the clean energy need in rural India is a huge task, and we have been able to gain traction with this solution in both poor grid and off-grid markets in India, through our direct sales channel.


Other significant information

Today, there is an historic opportunity to provide access to clean, distributed electricity to hundreds of millions of energy-poor customers in emerging markets. The opportunity exists now because of three types of recent innovations: technological, financial, and entrepreneurial. First, technological and manufacturing innovations have resulted in improved efficiencies and rapidly declining costs for solar panels, batteries, and LED lighting. Second, innovative entrepreneurial companies are pioneering promising new business models that deliver energy-as-a-service to energy-poor households and SMEs in rural areas of Asia, Africa, and Latin America. Third, a new breed of impact investors – both angel and institutional – are identifying, funding, and supporting early-stage social enterprises with seed capital. These factors have converged to create a set of successful and promising new business models that have achieved proof-of-concept, are demonstrating market acceptance, and are beginning to scale beyond their initial pilots.


Main Donor

USAID, Asian Development Bank, Overseas Private Investment Corporation + Various
(Private sector)

Implementing Actor

Simpa Networks (Private sector)