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Utilities Focus Areas – Business Models

Identify viable business models for Mobile for Development Utilities Services

To reach the full potential of Mobile for Development Utilities Services, viable business models need to be identified. We work with Mobile Network Operators (MNOs), Tower Companies, Energy Service Companies (ESCOs), Water Service Providers (WSPs), NGOs, Academics and investors to publish their experiences in order to increase the industry’s understanding and drive the creation of new, innovative solutions.

Building off the lessons of pioneering organisations in the energy and water access sector and the first generation of Mobile for Development Utilities trials, our programme explores different paths to scale from Corporate Social Responsibility to purely commercial business models. We believe that viable business models must take into consideration the strategic goals of telecom partners in rural expansion.

This section is focused on two areas:

  1. Business Models for delivering Energy Access via Mobile
  2. Business Models for delivering Water Access via Mobile

Business Models for delivering Energy Access via Mobile

The mobile industry can impact access to energy through three main channels:

  1. Base Station Infrastructure: mobile towers, the backbone and infrastructure to the mobile network, are prevalent in off-grid areas
  2. Retail Distribution Networks: the mobile industry’s product and airtime distribution channel reach remote rural communities
  3. Mobile Payment Technology: the development of scratch cards and mobile money provides an opportunity to extend consumer financing for energy assets.

From Base Station Infrastructure:

As mobile network operators seek to grow their network beyond the limits of the electricity grid, they need to find ways to provide power to their towers by either working with the local utility to extend the grid or by providing decentralized energy solutions to each tower and Base Transceiver Station (BTS). In both cases the presence of the mobile network can support the delivery of energy services to communities without electricity.

Models for delivering power to communities from a mobile tower:

  • Mobile towers can act as an anchor customer to a 3rd party energy service company operating a decentralized power system. The reliable demand and revenue’s from the mobile tower improves the commercial viability of the decentralised system from which other services to the communities can be delivered.
  • If the tower has its own autonomous power system excess power from the system can be used to provide basic services (such as phone charging services) to the surrounding communities.

Models to distribute energy to the communities from a mobile tower:

  • An energy hub
  • Mini-grid

Energy Hub
Energy hubs operate by providing a central point for communities to access energy services. These hubs can be directly beside the mobile tower, or a cable can be used to place the energy hub closer to the community and the main commercial activities.
Energy Hubs can range from installing a phone charging unit to constructing a building block with electrical outlets for SME tenants offering services. Energy hubs are appropriate when:

  • Community size is relatively small
  • There is a lack of population density driving up the cost of connection
  • There is insufficient demand to make up for the additional CAPEX of a mini-grid system

Mini-Grid
Successful deployments of mini-grid systems have occurred in population dense areas which minimises the cost per connection of grid extension. The main clients of mini-grids are individual households, community institutions (church, hospital, school) or local SMEs.

Example: OMC Power - Increasing access to energy, India (in partnership with Bharti Infratel)

From Retail Distribution Networks:

Commercial partnerships with local companies that sell portable solar products can enable mobile operators to leverage their retail and distribution networks to extend basic phone charging and lighting services to their customers. Enabling better phone charging services in off-grid communities with mobile coverage delivers the potential for revenue uplift for mobile operators in communities where subscribers no longer need to keep their phones off to preserve battery.

Example: Fenix International – Income generating energy solution, Uganda (in partnership with MTN Group)

From Mobile Payment Technology:

One of the greatest challenges for off-grid households looking to buy a home solar system is the upfront costs associated with the purchase. People living off-grid must often pay a premium for energy products and services such as one day’s worth of kerosene, one battery, or one phone charge as they are often unable to pay for economies of scale and live on day-by-day budget.

Although a household’s energy expenditure is a relatively large part of their total budget, they have limited means of accessing the financing required to make an asset purchase. The prevalence of scratch cards and the growth of “mobile wallets” can be leveraged to deliver pay-as-you-go-solutions for access to energy, providing financing for products to unbanked customers. Since 2011 there has been a significant growth in the number of enterprises that are using pay-as-you-go solutions for access to energy.

Example: M-KOPA Solar – Pay-as-you-go solar power, Kenya (in partnership with Safaricom)

Business Models for delivering Water Access via Mobile

The mobile industry can impact access to water through two main channels:

  1. Infrastructure: the energy provided to the mobile towers in off-grid areas could be leveraged to also provide power to water pumps and filtration units
  2. Mobile Technology: 
    • Payment Technologies: Pay As You Go systems and innovative payments schemes to maintain water systems
    • Remote Connectivity: GSM enabled water meters and sensors, could enable remote water point monitoring and improve understanding of user’s behaviour
    • Mobile Platforms & Services: mobile platforms can be used to support monitoring of systems and create two way communication platforms to enhance consumer feedback systems and better channel information to local users.

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