[INSIGHT] Could Mobile “Pay as You Go” Solar Succeed in China?

“Pay as you go” solar power systems are cropping up across Sub-Saharan Africa, bringing affordable, reliable, emissions-free electricity to rural communities and creating new business opportunities and employment while at the same time addressing pressing environmental challenges. Capitalizing on the popularity of mobile phones and tapping into funding and support from multilateral development programs, as well as from early-stage, venture capital (VC) investment groups, pioneering solar “pay as you go” systems developers are looking to expand.

Their success in Africa begs the question of whether or not mobile “pay as you go” solar energy systems can be successful in other parts of the world, such as Asia. China, for instance, has the world's largest installed base of solar PV cell and module manufacturing capacity. The central government has set ambitious solar and renewable energy targets in a bid to boost economic growth and create jobs, as well as reduce greenhouse gas (GHG) emissions and environmental degradation.

Furthermore, China, in large part, has a modern Internet and mobile telecoms infrastructure, and it's looking to build on that to boost economic development and growth. Mobile phones are used by an estimated 74 percent of the population, some 1 billion people, and the central government aims to transform China's economy, including the industrial and manufacturing sectors, with its Internet Plus strategic plan.

Pioneering Mobile PayGo Solar in Sub-Saharan Africa

Headquartered in San Francisco, California, with operations throughout sub-saharan Africa, India, Southeast Asia and Latin America, d.light was among the first to develop a robust, fully functional “pay as you go” distributed solar energy product line and information and communications platform. In July, the company announced it was licensing its PayGo solar power business platform worldwide.

Founded in 2008 as a for-profit social enterprise, over 64 million people in developing and lesser developed countries around the world have benefited from d.light's off-grid home solar energy products and services, according to the independent impact studies conducted by GOGLA. The goal is to reach 100 million by 2020.

At the core of d.light's PayGo offering is its cloud-based Atlas platform, which is used to market, sell, deliver and support customers and a growing range of off-grid solar energy home systems. These packaged solutions include solar panels, lanterns, mobile device chargers, radios and wired LED lighting.

At the top of d.light's product and service line is a complete, small-scale PayGo home solar energy system that includes PV panels, battery-based energy storage, cabling and a controller with a keypad which customers use to access the PayGo wireless network and top up their accounts.

d.light throws in a DC flashlight, radio and LED lights all for monthly payments that cost less than or equal to that residents pay for kerosene or other traditional, local fuels and energy, founder and CEO Ned Tozun explained in a phone interview from Nairobi.

Kerosene Lighting vs. d.light Solar Lighting
Kerosene Lighting vs. d.light Solar LED Indoor Lighting

Designed to be “plug and play,” customers mount d.light PayGo's 10-watt solar PV panels and run cables to connect them to the controller. Operating at 6-12 volts, the systems are safe and very easy to install, Tozun explained.

Local d.light field sales/service people make the rounds of rural villages and towns, conduct demonstrations that show residents how to install and use the system and products. The company also provides support in the form of connected service points, such as kiosks, and retail outlets. Franchise operators are provided with employee training, and can plug into d.light's cloud platform to provide call-center customer support, as well as to market and sell products and services.

d.light's PayGo and other similar innovative business models and cloud service platforms are bringing safe, reliable, affordable, emissions-free electricity to literally millions of people that have never had access to modern energy services. Could the same business and operating model be used in developing, or even developed countries?

China's Internet Plus Plan

New Internet technologies play a major role in the Chinese government's new economic strategy and plans. China's solar industry and energy markets may benefit from the government's Internet Plus plan, a strategic blueprint the central government is promoting as a new growth engine that will transform and upgrade China's economy.

We may now stand at the same starting line with the developed countries in information and especially in the Internet and even have more advantages than them in some aspects,

Premier Li Keqiang was quoted as saying at an executive meeting of the State Council June 24.

China has nearly 700 million 'netizens' and an enormous Internet market, gathering collective wisdom will make great things happen.

The premier pointed out that the Internet Plus plan is spurring innovation, enhancing China's economic capacity and playing a vital role in the launch of startup companies and job creation.

Overcapacity has been a persistent problem for manufacturers across industry sectors, and in China's solar PV industry in particular. China's manufacturers can resolve the twin issues of overcapacity and slowing growth by adopting The government's Internet Plus strategy, according to industry experts.

The manufacturing industry needs to combine the virtual economy with the real economy to revolutionize the current production mode,

Chen Quansheng, an economist and State Council counselor, said during an Internet Plus-New Economy Development  forum organized last summer by Peking University and Beijing Weimin Zhiguang Research Center of Internet Technology Development.

All this tends to support the contention that mobile pay-as-you-go solar energy systems can succeed in China. There are some significant barriers and factors that would make that difficult, however.

Lost in translation

Solar Magazine: Solar Industry News and Insights

d.light relies on Chinese solar energy manufacturers for its products. The company has an office in Shenzhen where a large team of engineers work, Tozun told Solar Magazine.

Working with the Jet Li One Foundation, the company has supplied solar energy products in China – in a remote, off-grid area of Sichuan province. That was really a one-off project, however, Tozun recounted.

d.light co-founders Ned Tozun and Sam Goldman
D.light Co-founders Sam Goldman [L] and Ned Tozun [R] in India

“We're focused on countries where electrification rates are low and grid access is either prohibitively expensive or completely lacking. We have a significant team in India, and we're very active in the Philippines, Papua New Guinea and other parts of Southeast Asia.”

When it comes to the possibility that d.light would enter the Chinese market the primary barrier is the extent of grid access and power generation capacity, Tozun said. “China has done a tremendous job building out electricity generation capacity and grid infrastructure...China's electrification rate is around 99%.” You also would need a much, much larger amount of solar power generation capacity per site installation, he added.

He continued by saying that China strikes him as more akin to the U.S., where third-party solar leasing companies, such as SolarCity, have significantly broadened access to home solar power by offering lease financing. Similar to d.light's pay-as-you-go model, solar leases remove the high up-front costs and make installing solar PV systems affordable for a much larger segment of the population.

“You can make a good economic case in support of the idea that pay-as-you-go solar could succeed in China in that it stretches payments out over time, which would lower the cost barrier for customers…”

“If that could be cracked, the case for entering the Chinese market could be very compelling, but at the moment I think that what we're focused on is Africa and other parts of Asia where the need for off-grid energy solutions is the greatest.” comment↓


Leave a Reply

Your email address will not be published. Required fields are marked *

Pop-up Subscribe Header

Subscribe to get updates delivered to your inbox.

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram