Can 'pay as you go' solar light up rural Africa? With millions in East Africa cut off from electricity grids and relying on kerosene, small-scale solar power could provide a cheaper, cleaner and more cheerful alternative.

Author:Fox, Benjamin
Position:Special Report

'With its abundance of clear skies and sun, and its limited electricity infrastructure, it is little wonder that Kenya is emerging as a big market for alternative sources of power such as solar energy. Less than half of Kenya's population is on the grid, and millions have to buy and burn kerosene for power, leaving a huge opportunity for innovative technologies and systems that can generate affordable and clean electricity.

One company tapping into this market, and lighting up swathes of rural East Africa in the process, is the Nairobi-based firm M-Kopa Solar, which has made impressive strides in recent years.

M-Kopa was founded by Nick Hughes, who created the M-Pesa system while at telecommunications giant Vodafone, and Jesse Moore, an American specialising in technology ventures in emerging markets. They both quit their jobs in 2010 "to start up a company without much of a business plan". But their breakthrough came when they realised that the average Kenyan off-grid' household was spending more than $200 per year on kerosene, a dangerous and expensive way to generate basic electricity.

"Kenyans spend a lot of money every day on off-grid energy solutions," says Moore. "They are tiny payments.. .but over the course of a year or five years the amount is huge. If you factor in the number of Kenyans living off-grid then you have a billion-dollar business opportunity."

M-Kopa thus spotted a huge gap, which the company's founders thought they could fill with solar, a renewable and clean source of power that simply requires users to have the right technology to generate their own electricity.

The company's signature product is simple--an 8W system with three lights, a phone-charging port and a chargeable solar radio. The equipment comes with a two-year warranty, though Moore stresses that the kit's normal lifespan is four to five years.

However, to make the solution viable, M-Kopa has had to be innovative in another way in order get around a potentially big stumbling block. While buying the $180 solar panel kit saves users money in the long run, many rural households would struggle to save up that kind of money for a one-off purchase. And it was here that M-Kopa looked to M-Pesa.

Most Kenyans don't have bank accounts, but millions do use M-Pesa, a mobile payments system that allows customers to make transfer money through their mobile phones. M-Pesa is at the heart of the M-Kopa business model.

"We were clear that mobile payments would be a...

To continue reading