PAYG solar in Asia: opportunites & experiences from MWC Shanghai 2016
This is a guest blog by Davidi Vortman, CEO and co-founder of Lumos, an off-grid renewable energy provider focused on emerging markets.
CEOs of leading mobile operators and key mobile industry players convened last week for GSMA Mobile World Congress Shanghai, to discuss trends and opportunities in Asian markets. Delegates will celebrate the billions of unique subscribers across Asia, but more importantly debate the opportunity and responsibility presented by this existing ecosystem to deliver crucial services in the region.
Accounting for half of the world’s unique subscribers and mobile connections, Asia dominates the global mobile industry. Mobile operators in these markets have a significant role to play in addressing social challenges – from financial inclusion, employment and economic growth, to offering essential services such as education, healthcare and financing services. MNOs are working hard to provide innovative solutions.
One of the main challenges the region faces is energy access – 700 million Asians still live off-grid, without access to reliable power. The amazing reality is that 80 per cent of them have mobile phones. But in order to charge their phones they need to walk or drive and pay USD 0.15 – 0.30 per charge (that’s USD 200 per KwH). Naturally, this causes people to think twice before they turn on their phone. These combined needs – the basic need for constant, stable electricity and the need to charge phones call for a simple, affordable and smart solution that can change people’s lives and allow them to enjoy continuous clean power.
Fortunately, solar, LED and storage technologies have reached a tipping point that enables innovative solutions addressing these basic needs. But technology is not enough. The industry needs business model innovation, similar to the pre-paid business model which was one of the main factors in the fast penetration of mobile phones in emerging markets.
Pre-paid was essential because it allowed consumers to pay in small amounts and it gave them the choice of when to pay (unlike post-paid which forces payment at the end of the month). At Lumos, we believe the same principle applies in Accessible Electricity™. Therefore, it makes sense to use the same airtime payment system for voice, text, data and electricity.
By offering electricity as a financial service paid via air time, we are transforming the energy spend from cash to digital and increasing airtime sales and thus ARPU by a factor of 2 – 3. Average monthly energy spend for a family is USD 10 – 15 – this amount is higher than the average monthly spend on communications. There is a clear win-win for the industry and the consumer, if we can offer a high quality solar system as a service, utilising the existing budget spent on energy and paid via airtime. This model is already a reality in Nigeria today, where Lumos has deployed thousands of units together with MTN, the largest mobile operator in Nigeria (60 million subscribers). Customers use airtime to pay for electricity and the clear results are substantial ARPU growth and increased loyalty (learn more through Lumos’ website).We already see adoption of Pico solar systems in Bangladesh and India. The next step is to introduce larger systems in a Pay-as-you-go model which can provide continuous electricity and support larger devices such as laptops and small TVs. Larger systems would also enable SMEs to enjoy affordable electricity, increasing productivity and revenues.
In the last 15 years, mobile operators brought communication to 80 per cent of the population in Asia. Now is the time to do the same for electricity!