Mobile payment innovation for sustainable energy access

Abstract

The emergence of new and innovative mobile payment mechanisms marks a significant breakthrough in the pursuit of affordable and sustainable energy access for poor households. The integration of mobile telephony infrastructure in energy service payment mechanisms enables rural and urban households to access decentralised renewable energy products and services. These include mini-grids, solar home systems (SHSs) and, more recently, pico-solar systems including solar lanterns. In Africa, energy delivery business models that use Pay-As-You-Go (PAYG) mobile payment systems have been developed by several businesses, including M-KOPA Solar in Kenya, Off Grid Electric in Tanzania and Econet Solar in Zimbabwe. Business model innovation enables greater affordability and choice for energy poor households through frequent, incremental and flexible payment options that mirror the income patterns of indigent households. Furthermore the unbanked urban and rural populations are reached and offered an alternative form of micro-financing for energy services and simple mobile money payment options through cellphones. Payment mechanisms that address affordability and payment flexibility could significantly contribute to the scaling up of modern energy access. This paper analyses the application of mobile payment mechanisms that could enable energy access in terms of billing, payment and usage monitoring. It furthermore explores critical success factors for the upscaling of effective mobile enabled payment mechanisms for energy services in other countries.