June 21, 2018 | By RGR Marketing Blog

Pay-As-You-Go Solar and the Future of Global Power

If you haven’t as yet heard of pay-as-you go solar power, it’s understandable. So far this strategy of delivering electricity to low-income households in rural off-grid areas has primarily been employed in Africa, Asia, and South America, and it’s been a revolutionary technology in places like rural Ghana.

With very little of our country outside the reach of the grid, the concept may never come home to the U.S. To date, most off-grid demand for solar in the United States has been driven by people who can afford to either purchase solar panels and battery banks out of pocket, or those who qualify for lease terms on a solar power system.

But with the slowdown in the year-over-year growth of solar that the industry witnessed in 2017, and the ongoing challenges we’ve been looking at in 2018, could pay-as-you-go style financing programs help any at home? How do pay-as-you-go solar programs differ from financing options that are currently available in the U.S.? Finally, is pay-as-you-go solar really working in Africa and elsewhere in the developing world?

How Pay-As-You-Go Solar Works Currently in Developing Countries

Pay-as-you-go solar companies (PAYGs) are growing exponentially in Africa, according to reports from sources like Renewable Energy World. Initially, expenditures in parts of East and West Africa, as well as parts of rural Asia and South America, have yielded companies enough in the way of profits that many PAYGs are seeking investment capital to dramatically expand their reach in these areas.

The way PAYGs work is, they offer rural families, individuals, and business owners the opportunity to purchase a small solar power generation system (and in some cases appliances and lights) for a minimal up-front fee and reasonable monthly payments—like a prepaid cell plan, but for electricity.

How Pay-As-You-Go Solar Could Expand If Funded

An EnergyPedia article claims that off-grid energy companies, or OECs, are expected to sell three million solar systems worldwide between 2015 and 2020. While this is much better from a sustainability perspective, when compared adding three million households to the grid, getting the necessary capital investments to expand existing programs in the developing world may not be easy—or even possible.

According to a report by Bloomberg New Energy Finance, the risks associated with extending credit to the 1.2 billion people who live outside the grid worldwide, might be too much for investors. The potential risks include currency issues, regulatory issues, and other factors inherent in investing in developing countries.

So Is Pay-As-You-Go the Future of Solar?

Pay-as-you-go solar, as a way to bring electricity to the inhabitants of developing countries living beyond the grid without adding more conventional power to the global energy equation, certainly has its merits. Unfortunately, the scale of the problem the strategy is attempting to address, and the will (and funding) needed to execute that strategy, may not be economically feasible. Regardless, the programs are helping bring power to many who would not have it otherwise, and in a sustainable fashion, too.

[image via: Renewable Energy World]

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