The energy-poor tend to be among the poorest people in their countries and cannot afford the high upfront costs of a quality solar solution. About 400 million people in India live in remote villages and don’t have access to an electricity grid. Millions more have only very limited access to electricity. Although distributed solar based solutions are available, high up front costs keep them out of reach from many who have limited income and cannot obtain bank financing.
Realising this “opportunity”, a number of players have taken to “solar as a service” model. However inexperience in rural markets, supply chain issues, timely collection of payments, and providing quick maintenance has been too much to handle for many of these companies. For this reason the Seattle based start-up Simpa Networks decided to spend a lot of time honing their solar-a-a-service model for energy-poor households and micro-enterprises, before jumping in to the scale up phase.
Present in India through its subsidiary, Simpa Energy India, the company has developed a basic, portable solar home system that is simple to install and affordable. Their basic system provides 2 to 3 LED lights, a 40-watt solar panel and a 26 Ah battery. Users pre-pay via cell phone based on actual usage and each payment adds to the total purchase price of the solar home system. Once fully paid, the solar home system unlocks and delivers free electricity for the expected 10-year life of the product.
In 2014, the Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution, committed to provide Simpa a $3 million loan, which has subsequently helped the company expand its customer base from 5,000 to more than 40,000.
Simpa is one of the seven OPIC clients which were recently honored with Impact Awards. The company was recognized for its efforts in the renewable energy category.
While the basic technology has existed for a long time, companies like Simpa have been making inroads with the delivery and financing mechanism, not to mention the crucial operation and maintenance (O&M) component, so that users can actually own and use these system. An important point to appreciate when analysing “poor” renewable energy markets, is to realise that “as a service” models are proof of these systems actually being used. On the other hand when a device/system is sold or even distributed under a grant, it might simply be eating dust for all you know! Also several users have proverbially speaking, burnt their fingers by using low quality products, and this has given the entire off grid solar sector a bad name (must read). This is why pay-as-you-go model appeals, they only have to pay when the system works.
Over the past 12 months, the company has recruited and trained over 3,000 sales agents. As Simpa President and Co-Founder Paul Needham explains, Simpa’s suppliers were often unable to keep up with the growth, and doubted that the company would grow the way it has. He points out that, acquiring and training rural employees for their sales and operations functions has been one of their biggest challenges. Paul explains these “solar entrepreneurs” find themselves driven by something more than money. He recalls an interesting comment from one of them:
“When we give a family an extra 4 hours of light every night, we extend their day, we give them more time to be together, more time to work, more time to study, more time to talk. We not only give them four more hours of light, we give them four more hours of life… every day.”
Simpa currently operates in 8 districts of rural Uttar Pradesh, and the company has set its eyes on pan-India expansion beginning in 2016, targeting districts in several of the ten most energy-poor states across the northern belt.
Access to energy is access to opportunity. Once a user has moved on to solar, they don’t want to go back to kerosene. Also, rural India is highly aspirational. Many people in villages have relatives in urban towns: they’ve seen the urban life, and they aspire for city comforts. As the market matures, the current consumers will progressively want to scale up their electricity usage. Is this on the radar of ongoing development activities of Simpa? Pauls says Simpa recognizes the lifetime value of each customer relationship and will work to provide upgrade opportunities to it’s customers.
Proliferation of the off grid electricity sector, especially due to the scale it can reach, has another potential problem for countries like India — e-waste. The e-waste laws and recycling processes in India are virtually non-existent. Has Simpa planned for this? Paul explains that Simpa works only with well known Indian suppliers for their batteries. These manufacturers have a legal obligation, and a financial incentive to take back old batteries for recycling. With time as Simpa’s reverse supply chain takes shape it will help to close the loop.
Click here to continue reading more stories from the off-grid solar sector.
Photo Credit: Simpa Networks via website
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