Mobile phone payments revolutionise energy access in Kenya

Signal of change / Mobile phone payments revolutionise energy access in Kenya

By Laura Picot / 30 Jun 2015

A Nairobi-based company is offering affordable energy to rural off-grid communities by enabling customers to pre-pay for power with their mobile phones.

SteamaCo installs hardware that facilitates remote owners’ monitoring of solar microgrids via cloud-based software. Customers then buy electricity through a pay-as-you-go service using their mobile phones, and all data is sent by SMS so there is no need for internet access, meaning that energy can be bought in the most rural or remote areas. SteamaCo uses M-Pesa a hugely popular mobile phone money platform, through which around 25% of Kenya’s GDP flows. According to the World Bank, 68% of Kenyans have no access to grid power, while around 95% are mobile phone users. "As soon as the payment is made, power comes on and the only thing one needs to do is flip the switch and enjoy the electricity," said SteamaCo co-founder Sam Duby: "No contracts, together with pre-payments for small units of airtime, revolutionized access to mobile telephone services in Africa. We believe the same will be true for energy services."

Customers typically pay a connection fee of around US$10 and then US$2-4 per kWh of energy used. Although this is high compared to per-unit of grid electricity, it is comparable to costs of pay-as-you-go solar-home-systems and cheaper than kerosene. Furthermore, some remote areas cannot access the national grid and the connection is around US$700, far more than many can afford.
SteamaCo is now supporting 30 grids (26 in Kenya and four in Tanzania, Benin and Nepal) that provide a total of 120kW of power to 1,000 homes and small businesses and it plans to expand further in Kenya and beyond. It recently won the prestigious Ashden International Gold Award and Business Innovation Award.

Image: Micro-grids bring electricity to rural Kenya

Image credit: SteamaCo

So what?

The system helps to overcome the traditional problems of keeping microgrids working reliably and profitably, as well as providing a potential solution for some of the 1.2 billion people worldwide lack access to electricity, 600 million of whom are in Africa. “Affordability is crucial to expanding access to electricity in developing communities, and doing so in an equitable way,” Dr Anne Wheldon, renewable energy expert and Ashden Awards judge, told The Guardian. “Paying per unit of electricity used means people can buy power in line with their earning patterns and domestic needs. It makes electricity for the poorest possible.”
SteamaCo has seen progress in sustainable development and entrepreneurship as a result of its system in Kenya. After connecting to microgrids, people have launched businesses including hairdressing salons, electronic repair shops and water pumping stations.
The company is looking into a privatised grid extension, whereby microgrid owners could buy a connection from the mains grid and share the cost with its users. Should electricity regulators approve the idea, it could make electricity affordable for millions of families.

Sources

The Guardian (2015, June 19) Phones4Power: using mobile phones to run micro-grids in Africa

Reuters (2015, April 16) Microgrids and mobile tech bring solar power to rural Kenya

What might the implications of this be? What related signals of change have you seen?

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