It’s a common thing in certain rural parts of Africa that electricity is generated through energy devices such as solar panels and batteries. In some cases these devices are donated by non-profit organisation. The debate remains: how sustainable is this model on a long-term basis? What’s required is to make clean energy scale in self-supporting way?
A San Francisco startup called Angaza has come up with an innovative business model using a Pay-As-You-Go (PAYG) system mixed with clean energy. Led by Lesley Marincola, the ceo has completed her B.S. and M.S. in Product Design and Mechanical Engineering at Stanford and has worked at Amazon (Lab126) on the Amazon Kindle design team.
Having raised $4 million, following its $1.5 million Seed round in 2013 to address the 1.2 billion people who currently live off the grid. Angaza’s point is that most of the 1.2 billion people on the planet without electricity don’t have enough ready cash at one time to purchase a solar light or energy system outright and are therefore stuck in a perpetual cycle, having to spend up to 20% of their income to buy kerosene fuel to burn for light at night.
PAYG allows off-grid families the opportunity to buy clean, reliable electricity in small, affordable increments. Angaza partners with manufacturers and distributors to provide them with a B2B PAYG solution.
According to Tech Cruch:
Here’s how it works: Take someone in rural Kenya. They typically first learn about the possibility of purchasing a solar lantern through a local sales agent of one of Angaza’s distribution partners. After making a small “down payment” for the device ($1-5), they take the lantern (often with a mobile phone charging port) and solar panel home. The lantern will stay on for an amount of time proportional to the size of the payment that was made. After that amount of time has elapsed, the device deactivates and cannot be turned on again until another payment is made, just like buying pre-paid airtime on a mobile phone. They can then use the money in their mobile wallet to send a payment from their phone to the distribution company that sold them the lantern. The user can then continue to make weekly payments of $1-2 each until the lantern is fully paid for, typically in inside two to 12 months, depending on the size of the product.
This signifies that sustainable solar energy for the customer, which they can pay off, ends their reliance on kerosene (which is massively polluting to the environment and a health hazard), and its also makes for a business model which doesn’t require yet more charitable donations. It also means distribution partners can see a four-to-five-fold increase in sales when they begin to offer PAYG, because the customers can actually afford to pay in these small increments via their mobiles.
Other distributors also use Angaza’s platform to sell Pay-As-You-Go energy devices in Kenya, Tanzania, Uganda, Malawi, Zambia, South Africa, India, and Pakistan.
While there are several other Pay-As-You-Go solar companies focused on the East Africa and Indian markets, they have taken a completely vertically integrated approach (e.g. M-KOPA and Off Grid Electric). This means that they manufacture their own product, build their own PAYG technology, distribute their products to end users, and provide after-sales support.
The executive team comprises Lesley Marincola (CEO), Bryan Silverthorn (CTO) (who are brother and sister) and Victoria Arch (VP of Global Strategy). Its ten person San Francisco office includes primarily hardware and software engineers as well as a small business team. Its three person Nairobi office focuses on fostering partnerships with PAYG distributors.