NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, February 5, 2018

There’s long been an expectation by both analysts and casual observers that solar power would play an important role in filling the huge deficit in Africa’s power generation capacity. One challenge has always been how to deliver a consumer proposition that would be affordable for some of the poorest people in developing countries, particularly in rural areas.

Services that allow customers to pay for solar equipment and service in small installments have picked up momentum in the past couple of years, particularly in East Africa. Two firms that supply solar power products with pay-as-you-go products have raised a total of $75 million in financing this month to back up that long-held vision.

Social impact investors, many of which are backed by US-based or European funds, have focused on this area especially in trying to get electricity to remote rural areas which are unlikely to be connected to a traditional electricity grid anytime soon.

San Francisco-based Off-Grid Electric, which serves about 150,000 people in Tanzania, Rwanda, Côte d’Ivoire, and recently expanded to Ghana, has secured $55 million funding which will be focused on research and development and further expansion of its services on the continent. The Series D funding was led by Helios Investment Partners, with support from GE Ventures.

Off-Grid Electric’s model allows its customers to pay in installments or lease its system over two to three years before they fully own the solar equipment, thus making it more convenient for customers. In November 2016, it partnered with UK energy giant EDF in a joint venture in Côte d’Ivoire which is now expanding to Ghana.