Flexible financing boosts uptake of solar lighting

The number of Kenyans using solar power has increased in the last three year, thanks to solar companies’ flexible financing models. Kenyans in rural areas and urban settlements are finding it easier to acquire solar products through contract payment models, commonly referred to as pay-as-you-go.

“We are finding more customers inclined to take up solar products with staggered payment models because they find them easier to access,” said University of Nairobi’s Simon Kiragu, who is doing a study on the uptake of clean energy.

“Instead of being limited to inefficient products that come in at a low price point, users can pay for quality products weekly or monthly until they have been paid off, meaning such plans are suitable even for those with seasonal incomes, such as agricultural workers.”

Flexible financing plans also have the added advantage of allowing customers to immediately begin using solar products, thus saving them the money they would have otherwise used to buy kerosene.

A market survey conducted last year by Azuri, a solar company, on its customers in Western Kenya found that 37 per cent of them invest the expenditure saved on their children’s education.

It also found that the social benefit of solar in homes is an additional two hours of light at night, which children can use to study.

Azuri’s lighting systems cost between Sh250 and Sh350 a week. Customers purchase scratch cards that they then use to buy units to power their solar systems. They only top up when they want to use the product.

Quality guarantees

The UK-based firm added that apart from making it possible for the poor to afford solar, the pay-as-you-go model gives customers guarantees on the quality of a product through after-sales service.

“It is in Azuri’s best interests to provide an extremely high quality product with excellent customer service to maintain a long-lasting customer relationship,” said the company’s CEO, Simon Bransfield Garth.

Pavel Oimeke, the director of renewable energy at the Energy Regulatory Commission (ERC), noted that sub-standard solar products have flooded the market, making it difficult for customers to seek after-sales service on faulty devices. Staggered payment systems, however, are helping discourage this.

“By making payments for the duration of the service, rather than for a single product unit, customers are guaranteed working products built to a high standard,” Mr Garth said.

Azuri and M-Kopa are some of the institutions that have recorded huge sales on solar products through contract payment models.

Azuri said it has sold 20, 000 devices in Kenya in two years, while M-Kopa, which launched in 2013, reported sales of 200,000 units as of May across Kenya, Tanzania and Uganda.

Global Off-Grid Lighting Association data indicates that the sale of pay-as-you-go solar home systems in East Africa in two years has impacted on one million off-grid consumers.