Expanding the Frontiers of Energy: Pay-as-You-Go Energy

by Alison Kibe

With little to no access to electricity grids in rural areas of Africa, the Nairobi based startup M-KOPA solar launched in 2012 as an effort to provide affordable solar energy units to households in Kenya, Tanzania, and Uganda. A recent press release announced that M-KOPA is entering its fourth round of investment worth $12.45 million (Jackson, 2015). The money will be used to add products to M-KOPA’s line, expand business into East Africa, and license their products for use in other markets (Jackson, 2015). The start up also won the Zayed Future Energy prize in February. Worth $1.5 million, the money will be used to start a development program called M-KOPA University that will focus on developing employees’ business and technical skills (Mutegi, 2015).

The product M-KOPA’s website (M-KOPA.com) currently offers is a home solar energy unit. Households can purchase the unit under a pay-per-use installment plan that costs $35 up front and an additional forty-five US cents per usage credit. After a year of payments, customers own the solar cells and can increase the amount they spend on power. This ends up costing less than kerosene lighting and does not create a fire hazard or emit harmful fumes.

The M-KOPA website also claims to add 500 new customers to its existing 150,000 customers every day. Part of what makes M-KOPA so effective is that everything is paid through existing cellphone service infrastructure. Cellphones provides a quick, easily accessible, and real-time payment method. One of the co-founders of M-KOPA, Nick Hughes, was one of the original creators the cellular service M-PESA (Nicke, 2013). Owned by telecom giant Vodafone, M-PESA is well established in Kenya, providing cellular service to 95% of Kenyan adults.

As shown through the interest of investors, the success of M-KOPA is promising so far. Access to electricity allows households to have light at night, which expands opportunities to work and study. People can also use units to charge cellphones and share with neighbors. Economic development researchers are also interested in the types of household data that could be collected. These opportunities are intriguing, and could potentially be useful ways that have yet to be thought of.

 

Jackson, Tom. “M-KOPA Solar raises $12.45m in latest funding round.” Disrupt Africa. February 2, 2015.

http://disrupt-africa.com/2015/02/m-kopa-solar-raises-12-45m-latest-funding-round/

 

Mutegi, Lillian. Kenya: M-Kopa Wins Zayed Future Energy Prize. All Africa. January 15, 2015.

http://allafrica.com/stories/201501200298.html

Nique, Michael. A Look at M-KOPA: An interview with Nick Hughes. GSMA. February 14, 2013.

http://www.gsma.com/mobilefordevelopment/a-look-at-m-kopa-an-interview-with-nick-hughes

 

M-KOPA.com 1

M-KOPA Press Release. M-KOPA Solar Closes Fourth Funding Round. February 2015. http://www.m-kopa.com/press-release/m-kopa-solar-closes-fourth-funding-round/

TAGS: Solar Energy, Africa, Kenya, Tanzania, Uganda, M-KOPA, M-Pesa, pay-as-you-go

 

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