Pre-payment brings power to the people
Pre-paid electrical meters mirror the ubiquitous pre-paid cellphone. Users can purchase energy “tokens” from a handful of providers (including mobile payment providers). Each token has a 20-digit number that can be entered into an electric meter to unlock the purchased amount of electricity. Users pay higher prices per kilowatt-hour as they consume more electricity.
These increases are quickly recognizable by the user, encouraging conservation. At least, that’s the idea. In practice, some complain that rate information isn’t transparent enough, and that different token providers charge wildly variable service fees, confusing pricing signals to customers. Further consumer education is likely needed to ensure that they achieve these goals.
But pre-paid meters have another advantage. Like the rest of Kenya’s electrification initiative, they feed into the country’s broader economic development plan: The program is supporting new job growth, as vendors are needed to sell the energy tokens. In the mobile market, a similar marketing model created 100,000 new direct jobs.
Pre-payment has also helped the utility shore up cash reserves, because customers can’t miss payments. In September 2012, Business Daily Africa reported that by June of 2011, Kenya Power had already accumulated Sh7.4 billion ($84 million) in unpaid electricity bills for the year. With pre-payment, those funds can be used to further invest in its electrification program.
Renewable energy entrepreneurs are looking to the success of the model as a way to introduce their products to rural Kenyans, as well. “In most cases, people may not have adequate resources to invest in the upfront costs,” says Chitechi. “It’s one of the biggest barriers to adoption.”
Stima, Angaza and Azuri are among the startups offering pay-as-you-go solar, which allow users to install a few, small solar panels at a time, with no up-front cost. To access power from their panels, customers buy energy credits using a mobile payment system. Unlike the utility-installed pre-paid meters, however, solar customers can eventually pay off their solar panels and permanently “unlock” access to the electricity. Two entrepreneurs at the CIC are also looking at ways to leverage pre-payment to finance the up-front cost of renewable energy systems.
If innovations like these can support cleaner, more efficient energy use for urban and rural customers alike, Kenya just may have a chance to make the hop toward a strong, low-carbon economy.