Flexible, prepaid metering makes solar power affordable in rural India. ADB is investing in this simple yet radical solution, which can be applied in other parts of the region.
There are about 400 million people in India who live without electricity - most of them in rural areas not covered by the existing electrical grid.
Solar home systems and community-scale solar micro grids offer a clean energy alternative to providing off-grid access to electricity. At present, energy-poor households in India depend on kerosene to light their homes. Some also use charcoal, firewood, paraffin, candles, and disposable batteries. These are hazardous not only to health, but also to the environment.
Solar home systems use a photovoltaic module to provide power for lights and small appliances. However, one unit costs at least $200, which many rural households cannot afford to buy.
A private company Simpa Networks has come up with a flexible metering solution that allows consumers to acquire a solar home system on installment basis and purchase energy credit using a mobile phone's short message service. After paying a 10% to 30% downpayment, customers decide on how much energy credit to buy, which can be as low as $0.88. Each payment adds toward the final purchase price. When it is fully paid, the solar home system will unlock permanently and continue to produce electricity for free.
Simpa's operations in India are based out of Bengaluru in Karnataka. It has received international recognition for providing affordable and commercially sustainable solar power to underserved consumers. After strong market response to the initial rollout in Karnataka, the company has started offering its products in Uttar Pradesh.
Simpa also offers the system to solar micro-grid developers as a prepaid metering, customer, and revenue management solution.
"The success of this entrepreneurial venture could lead to increased venture capital funding for inclusive business models, which deliver goods and services to those at the base of the economic pyramid."
- Aniruddha Patil, ADB senior investment specialist
In March 2013, ADB announced that it was making a $2 million equity investment in Simpa, which will help the company scale up the sales of its off-grid, pay-as-you-go solar energy solutions.
"The success of this entrepreneurial venture could lead to increased venture capital funding for inclusive business models which deliver goods and services to those at the base of the economic pyramid," said Aniruddha Patil, senior investment specialist at ADB's Private Sector Operations Department, in the news release.
In a recent report, ADB experts noted that though ADB's investment in Simpa is small compared with its other equity investments, the development impact is potentially high.
"The future of Simpa's pay-as-you-go solar energy offering is sunny," they said. Other Indian markets being targeted include Maharashtra, which has 3.4 million households with no access to electricity, and Uttar Pradesh, which has 19.4 million households without electricity.
Simpa plans to serve over 63,000 rural households in 2 years' time.