Pay-As-You-Go financing: A model for viable and widespread deployment of solar home systems in rural India

Yadav Prabhakar, Heynen Anthony P, Palit Debajit
Energy for Sustainable Development, Vol 48(2019):139-153p.
2019

Decentralised Solar Home Systems (SHSs) are established as an effective strategy to connect the ‘last mile’ without electricity access and leapfrog communities to clean energy solutions. According to the World Bank, the Pay-As-You-Go (PAYG) model has emerged as one of the effective commercially viable solutions to provide decentralised energy access to rural and remote communities in developing nations. The paying ability of households is a critical challenge for energy enterprises, and PAYG, with its easy payment schemes makes solar units affordable and allows households to gradually own these systems. The model also offers user training, ongoing maintenance, and service blocking functionality tDecentralised Solar Home Systems (SHSs) are established as an effective strategy to connect the ‘last mile’ without electricity access and leapfrog communities to clean energy solutions. According to the World Bank, the Pay-As-You-Go (PAYG) model has emerged as one of the effective commercially viable solutions to provide decentralised energy access to rural and remote communities in developing nations. The paying ability of households is a critical challenge for energy enterprises, and PAYG, with its easy payment schemes makes solar units affordable and allows households to gradually own these systems. The model also offers user training, ongoing maintenance, and service blocking functionality that minimises investment risk. The PAYG model has demonstrated huge success in Sub-Saharan Africa where Kenya pioneered the model as a cost competitive modern alternative for kerosene. One in five people in India lack access to electricity, and grid-connected rural communities often face frequent blackouts. With the advancement in distributed solar technologies and growing penetration of the mobile telecommunications network in India, PAYG could advance into a successful model to electrify communities living off the grid. Our analysis involves a two-dimensional approach where a systematic review of PAYG literature including case studies from Kenya and India was performed, followed by three expert interviews to further augment learnings and opportunities to deploy PAYG SHSs in India. This analysis finds that India's socio-political context seems suited for increased PAYG penetration, including utilising the opportunity provided by the country's Unified Payments Interface. This paper offers insights for practitioners and policymakers to consider the PAYG model to deploy clean electricity to households and rural micro-enterprises.

Themes
Tags
Energy access
Solar home systems
Rural electrification
Region

WSDS 2019