Selling solar power using the cell phone trick

A solar power company in India is testing out a new business model inspired by the pay-as-you-go cell phone cards.
Written by Christie Nicholson, Contributor on

Studying by solar lantern

A new company is offering solar power systems using the same business model as the pay-as-you-go cell phone systems.

Simpa Networks has launched such a system to off-the-grid users in India, where the cell phone model is extremely popular—there are 600 million cell phone users in India—and where solar energy is perceived as being just too expensive.

The basic system provides about 25 to 50 watts, enough to power a mobile phone charge or two CFL lights. Customers can buy increments of 50, 100, or 500 rupees of pay-as-you-go cards just like the cell phone cards. And customers pay a one-time fee for the hardware, approximately 10% of the cost of the total system which runs around $300. Like a rent-to-own, after two or three years of using the system the customer owns it outright and can use the solar power for free. This allows them to eventually own equipment that they could never otherwise acquire since many of Simpa's customers do not have sufficient savings or cannot get a loan. And most are already very familiar with the concept of the cell phone minute cards. Simpa makes money by taking a cut from the watt hours used and the markup on the hardware.

From GigaOM:

...these customers are really interested in getting a better option for energy. Most of them currently use kerosene for lamps, or diesel or wood burning — all these things are more hazardous to health and more expensive than grid power and off-grid solar. These customers often end up paying a lot more per capita and per their income than someone with grid-connected power.

There are about 50 systems in use in Bangalore. Simpa has raised $1.3 mil from angel investors and is seeking $4 mil in the next round of funding. Simpa hopes to be selling 5,000 such systems per year.

[via GigaOM]

[Photo Barefoot Photographers]

This post was originally published on Smartplanet.com

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