Pay-as-you-go (or PAYGo) is emerging as a solution that offers low-income households and operators in developing regions like Africa to scale off-grid renewable energy solutions and get access to electricity.
Why This Matters
Rural areas in regions like Africa have remained the most challenging to distribute electricity to. More than 600 million people in Africa alone do not have access to electricity – that is nearly twice the population of the United States.
Climate change has also compounded the negative effects of no access to electricity. Children in the rural regions of Pakistan often cannot go to school due to extreme heat.
What PAYGo Is
Under a PAYGo model, a low-income household can take home a solar home system by paying a downpayment or deposit – about 10% to 20% of a system’s cost of ownership – and committing to a certain number of ongoing payments by signing a solar lease with a PAYGo operator.
A customer makes daily, weekly or monthly payments drawn from a mobile money account that is set up to pay down a portion of the principal, not unlike a monthly mortgage against a home in the U.S.
Not Without Challenges
A briefing Note, PAYGo Solar: Lighting the way for flexible financing and services, examines four key industry challenges from a financial inclusion perspective that serve as the foundation for PAYGo’s solar mission.