Does PAYGO pay for solar energy in Rwanda?
Households that use PAYGO systems to pay for their energy services are among the wealthier segments of the rural population in Rwanda. It is more challenging for poorer households to afford solar energy even with PAYGO.
What is pay-as-you-go (PAYGO)?
Pay-as-you-go (PAYGO) is a digital financing technology that allows end-users to digitally pay for solar energy in weekly instalments. (Read more on Pay-as-you-go Approaches (PAYGO)). Find an overview of relevant companies and their approaches here. If you are interested in how the PAYGO market developed, read this PAYGO market overview.
How does PAYGO work?
Companies applying PAYGO approaches manage to raise large-scale working capital from investors to finance up-front costs. Those companies often do not have access to traditional financing institutions like banks, but due to their demand are expected to be served with less expensive loans in the long run.
Is PAYGO the key driver for energy access?
PAYGO has been hyped since its appearance a few years ago. The advantages identified in this article are that PAYGO is considered as the key driver for energy access, that PAYGO fosters a commercial, demand-driven approach of energy access and that therefore private investment for energy access increases because private sector is able to step in.
Are PAYGO and kerosene connected?
Many use their phones to pay for the instalments, therefore both technologies are interconnected. Azuri’s research found that PAYGO systems cut customers weekly energy spending by as much as 50 percent. “Whereas residents typically spend $2 per week on kerosene, they might pay $1 per week for the basic PAYGO system.
What makes PAYGO a successful energy access business model?
PAYGO fosters a commercial, demand-driven approach. Therefore, it is in the companies’ own interest to meet the customers’ needs (quality, after-sales service and customer care). Competition will stress test energy access business models and reveal successful approaches.
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