Worldwide, approximately 1.6 billion people have no access to electricity and another 1 billion have extremely unreliable access. Many households spend up to 30% of income on inefficient and expensive power sources such as kerosene for lanterns and batteries for flashlights. Over time, the total expenditure for energy sources such as kerosene (dangerous, dirty) or batteries (environmentally hazardous) is actually higher than for energy from a clean and sustainable source: the sun. But low-income families cannot afford to pay $400 up-front for solar energy systems (SES), and traditional lenders won’t lend to households without a dependable and steady income.
Pay-as-you-go + rent-to-own = solar power for billions
Simpa’s solution to making clean energy “radically affordable” is a concept they call Progressive PurchaseTM. This pricing model seeks to achieve three essential aspects of affordability: a low upfront cost, an affordable total cost of ownership, and flexibility in how consumers can pay for the total system over time. Simpa SES are financed with a pay-per-use method, modeled off the familiar pay-as-you-go pricing model for prepaid mobile phone service, common in developing countries.Customers pre-pay, in cash, in whatever amounts desired at local “recharge” agents signed up by Simpa. Agents use SMS to communicate purchases to Simpa, where the core revenue management software debits their account and sends back a usage code. Once the paid-for energy is consumed, the SES locks and the customer is asked to purchase another top-up. These top-ups don’t just pay for the power; they also pay down the cost of the SES itself. When the cost is fully paid off, the SES unit is permanently unlocked, and generates free electricity for the rest of the expected 10-15 year lifetime.
ThoughtWorks Social Impact Program develops core technology, in just twelve weeks
The technology to implement Simpa’s vision had to be built and the concept test-marketed to gain investor confidence and further investment. In order to get the Simpa SES pilot launched as fast as possible and to make best use of the existing seed funds, Simpa looked to ThoughtWorks to develop the core revenue management software and SMS communications technology. ThoughtWorks deployed a team of experts in mobile technology from its offices in Bangalore, near the site of the first Pilot. Design, coding, testing and deployment for this custom SMS-enabled revenue system were completed, from scratch, in twelve weeks.The new system is now helping Simpa transform energy expenditure into an asset purchase for billions of people at the base of the global economic pyramid, and is in commercial use for the Indian households targeted in the Pilot.
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“If we can make solar energy as affordable as kerosene and other dirty energy sources across the developing world, the market will readily make the switch to cleaner forms of energy. What’s been missing until today is the pricing and payment model to enable this critical transition.”
Michael MacHarg, Co-Founder Simpa Networks
Michael MacHarg, Co-Founder Simpa Networks
Highlights
- With help from ThoughtWorks’ Social Impact Program, Simpa will continue to iterate and improve its Progressive Purchase pricing model, expanding sales of Simpa-enabled solar energy systems across Karnataka and other regions of India in the year ahead.
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