Lessons learned from our grantees: Mobisol
Case Study 3: Mobisol – Pay-As-You-Go (PAYG) Solar for Entrepreneurs in Rwanda
In 2013, we launched the M4D Utilities Innovation Fund (formerly MECS) to test and scale the use of mobile to improve or increase access to energy and water services. With the support of the UK Government, GBP 2.4 million in Seed and Market Validation grants was awarded to 13 organisations in 11 countries across Africa and Asia.
Today we continue our Case Study series on lessons learned from these 13 projects. A core output of the Innovation Fund is the lessons and evidence base developed throughout the grant timeline that can inform ecosystem players, such as commercial benefits to mobile operators, and social and economic impacts for the underserved. By making these lessons public, we intend to accelerate scaling and sector growth. Since the inception of these grants, we have already seen significant expansion and innovation to mobile-enabled products and services for water and energy delivery as well as sanitation, and the business models that support them.
The third Case Study in our series focuses on Mobisol, a Berlin based company which launched its solar pay-as-you-go (PAYG) business in Tanzania in 2012. Mobisol offers off-grid customers in emerging markets pre-paid solar home systems paid through a 36-month loan term, including customer support and maintenance. This PAYG model is enabled by mobile payments and GSM based machine-to-machine (M2M) connectivity in the solar unit to monitor system usage and performance while providing Mobisol remote control.
In December 2013, GSMA awarded Mobisol a GBP 228,000 Market Validation grant to replicate its innovative mobile-enabled energy business in Rwanda, through a partnership with MTN Rwanda.
In response to the country’s widespread need for electrification, accompanied by limited livelihood possibilities, the main objective of the grant was for Mobisol to explore the market demand for entrepreneurial systems that can generate income through business kits for charging phones and lanterns.
Other key objectives were to:
- Gain insights about replicating the pay-as-you-go solar model in an unproven market.
- Understand the opportunities of pay-as-you-go solar for MNOs, in this instance MTN Rwanda.
Some of the most valuable findings from the project are outlined below and are explained in more depth in the Case Study.
Increased revenue opportunities for entrepreneurs
The value proposition of PAYG solar home systems has been proven, with several profitable start-up companies offering affordable, cleaner and higher quality in-home energy solutions. Mobisol’s grant sought to take the concept a step further, beyond asset financing, by testing the additional value proposition of offering a business kit to customers for income generation. The focus of the grant was therefore on 100W and 200W systems with charging business kits, including a MobiCharger for multiple phone or laptop charging and 20 lanterns for rental.
Mobisol set out to sell 400 entrepreneurial systems to customers to learn about the demand and value of this offering to both customers and Mobisol’s own business. 22% of all Mobisol customers in 2014 opted to buy the business kit to generate income with their systems, confirming Mobisol’s expectations that 20-30% of customers would invest in a system that could generate revenue through a charging service.
One of the most significant livelihood benefits to Mobisol entrepreneurs was the finding that they can earn an estimated RWF 25,000 (USD 35)/month from their phone and lantern charging business, exceeding the monthly cost of Mobisol’s 100W system with the business kit. Furthermore, eighty percent of Mobisol entrepreneurs keep their business open 1.5 hours longer than before Mobisol, resulting in additional revenue.
Strategic replication in an untested market
A key objective of the Market Validation Grant is to better understand the building blocks to scale mobile-enabled businesses. This project provided particularly important insights into this as Mobisol sought to replicate a “blueprint” from their operations in Tanzania and then build a Rwanda specific operations manual.
Mobisol demonstrated that their business model has strong potential for replication, though key aspects require in-depth assessment and hands-on management. In particular, Mobisol made important adaptations to their products and pricing, entrepreneur support, and sales in order to spark early demand where initial willingness to pay was lower than expected. For example, shifting the size of solar home systems to match the location-specific sunlight availability and customer demand; building standardised training models and evaluation for agents and technicians; and addressing barriers and incentives to support solar entrepreneurs.
Pay-as-you-go solar drives mobile money usage
Another important objective was extracting the learnings on the impact of solar pay-as-you-go on mobile money. Results demonstrated how Mobisol is driving account activity, for example;
- Mobisol entrepreneurs make an average of 1.7 payments per month via MTN mobile money, exceeding the industry benchmark of one transaction every 90 days
- Mobisol’s systems are enabling new customer acquisition with an estimated 20% of business kit users registering for MTN mobile money for the first time .
Catalysing investment and new partnerships
The M4D Utilities Innovation Fund grant had a catalysing effect for Mobisol, with EUR 6 million in funding from the EU awarded in December 2014, matched by private and government investment to total EUR 22 million to support Mobisol, alongside the Rwanda Energy Development Corporation Ltd., to provide 49,000 solar home systems to households and 1,000 to schools in Rwanda by mid-2018. This partnership between a national utility and off-grid solar provider the first of its kind, and highlights the key impact that the M4D Utilities Innovation Fund seeks to achieve.
In the coming weeks and months we will publish more Case Studies to share insights from the other Phase 1 grantees. Follow the series by signing up to our blog and please share your views on any of these findings by contacting us at firstname.lastname@example.org.
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