Publication: Digitally Financed Energy: How Off-Grid Solar Providers Leverage Digital Payments and Drive Financial Inclusion
Loading...
Date
2016-03
ISSN
Published
2016-03
Author(s)
Editor(s)
Abstract
The expansion of digital finance systems in the developing world has altered this financial context and enabled new business models that rely on small, regular payments. In the off-grid energy sector a group of solar companies, primarily in East Africa and South Asia, are leveraging digital finance to offer pay-as-you-go (PAYG) energy. This brief explains how digital finance is enabling PAYG energy expansion, which in turn provides a gateway to a range of financial products for the financially excluded.
Link to Data Set
Citation
“Waldron, Daniel; Faz, Xavier. 2016. Digitally Financed Energy: How Off-Grid Solar Providers Leverage Digital Payments and Drive Financial Inclusion. CGAP Brief;. © World Bank. http://hdl.handle.net/10986/24566 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Institutional Approaches to Electrification(World Bank, Washington, DC, 2012-04)Energy poverty is a global problem: access to energy services is crucial to meet basic household needs, deliver and access public services, and generate income. Less than 10 percent of Sub-Saharan (SSA) rural households have access to electricity, with an overall access rate below 25 percent. One of the main obstacles for SSA electrification practitioners is the difficulty in obtaining practical and timely knowledge on how to overcome economic, technical, institutional, and political barriers to electrification in their day-to-day work. Launched in 2008, the Africa Electrification Initiative (AEI) seeks to create and sustain a living body of practical knowledge and a network of SSA practitioners for the design, development, and implementation of rural, peri-urban, and urban on-grid and off-grid electrification programs. AEI supports the network by organizing workshops and promoting online discussions and knowledge exchanges on topics important for its members. The workshop set out to address a number of relevant electrification topics previously identified through in-depth discussions and ongoing knowledge exchanges among a growing network of SSA practitioners. The workshop's main focus was on ground-level implementation of different institutional approaches to electrification, with particular focus on the experiences of rural energy agencies/rural energy funds (REAs/REFs) across SSA. The workshop lasted two and a half days, comprising 21 sessions, including regular session panels and discussion clinics with a longer duration. It also featured exhibition space for posters submitted by participating institutions, an expo of approved lighting products from the lighting Africa program, and an awards ceremony to recognize the best papers submitted by SSA electrification practitioners in response to the AEI call for papers.Publication ICT Solutions for Energy Efficiency(World Bank, Washington, DC, 2012)The report is focused on showing a wide range and variety of ways in which Information and Communication Technologies (ICT) solutions could play a transformative role, and so the bulk of the report provides case studies of actual examples of ICT solutions already developed and in action to enable energy efficiency in three particular areas, namely, smart logistics, smart grid/smart metering, and smart buildings. Ultimately, in line with the WBG's charter, this study is concerned with the question of how ICT can play a transformative role in developing countries'climate-smart future. However, as the World Development Report 2010 recognized, this is bound to start in higher-income countries, which have the incentives (being high-energy and high-cost users), the technical know-how and the resources to innovate and implement pioneering solutions to cut their costs and their carbon emissions. Some such solutions will have applicability to the developing world; a minority right away, more year by year as technology is proven and efficiencies of scale kick in. The report concludes with some thoughts, drawn out of these case studies, on the trajectory of ICT in energy efficiency in the world generally, but especially within the focus areas of logistics, the grid and buildings, and on what these case studies might mean for developing countries and their priorities in terms of energy efficiency.Publication Decentralized Energy Services to Fight Poverty : Outcome Driven Engagement of Small and Medium-size Enterprises in the Provision of Energy Services in IDA Countries(Washington, DC, 2009-06)The Department for International Development (DFID)-Funded Energy Small and Medium Enterprises (SME) Program was created to support SMEs by helping countries unblock the factors that prevent their potential in the delivery of energy services. With thirteen energy projects in twelve countries and one regional program in Africa, the implementation of the program started considerably slower than expected but has demonstrated potential to make an impact in a relatively neglected area of delivering energy services to the poor. Lack of access to sufficient and sustainable supplies of energy affects as much as 90 percent of the population of many developing countries. Some 2 billion people are without electricity; a similar number remain dependent on fuels such as animal dung, crop residues, wood, and charcoal to cook their daily meals. Widespread inefficient production and use of traditional energy sources, such as fuel-wood and agricultural residues, pose economic, environmental, and health threats. Uneven distribution and use of modern energy sources, such as electricity, petroleum products, and liquefied or compressed natural gas, pose important issues of economics, equity, and quality of life. The Energy Sector Management Assistance Program (ESMAP) Energy SME program focused on off-grid electrification and biomass use as many communities and households that have yet to be electrified are relatively isolated, and off-grid electrification may be the only economically rational choice. Pilot initiatives were launched in 12 countries to address specific economic, institutional, and technical characteristics of small medium size enterprises. Baseline assessments revealed that many of these enterprises will not be economically viable, unless they receive an initial direct or indirect capital cost support in the form of subsidies or grants. Even with such subsidies, the underlying economics of the enterprises remain fragile. The pilot programs focused on the following activities: 1) assessing the legal, institutional, and financial framework under which SMEs can function in the energy sector; 2) supporting training, pilots, and tests of technology or financial schemes; 3) assisting SMEs develop their investment plans, and 4) studies and analyses needed to promote SMEs in general as well as in the context of ongoing World Bank Group investment programs. One of the biggest challenges for SMEs is the need for further support to acquire investment loans from commercial financiers.Publication Toolkit on the Appraisal of Small Renewable Energy Projects : Tanzania Case Study(Washington, DC, 2012-07)Following this introductory chapter, chapter two continues with a general description of the regulatory, institutional, and policy environment for Renewable Energy (RE) in Tanzania. The chapter describes the main existing institutional arrangements in place and shows that the country's legal framework is conducive to private sector RE initiatives. Chapter three discusses the fundamentals of project finance, the basic components of financial analysis, and common due diligence factors concerning RE investments. This discussion provides a framework for a better understanding of RE financing, which from a banker's point of view requires a different approach than the more traditional balance sheet-focused financing. Chapters 4 through 8 go over each of the most common RE technologies: chapter four: Hydropower; chapter five: biomass; chapter six: biogas; chapter seven: solar PV; and chapter eight: wind. Each of the chapters discusses both the basic technical and financial aspects of the technologies. Each chapter will provide the reader with a basic understanding of the technology in question and the associated financial challenges. In the chapters on hydropower (chapter four) and biomass (chapter five), a financial 'back-of-the-envelope' model is included as well.Publication Photovoltaics for Community Service Facilities(World Bank, Washington, DC, 2010)In many developing countries with large rural populations and low rural electrification rates, most community health and education facilities lack access to electricity. For facilities in remote areas beyond reach of the national grid, photovoltaic's (PV) systems may offer the most practical and least-cost way to access electricity. A PV system uses predictable solar resources and has long been cost competitive with diesel generators and other alternatives. In off-grid rural primary schools and health dispensaries, for example, PV systems oftentimes are an appropriate way to run many low-power, high-value appliances and equipment, from lamps and vaccine refrigerators to water pumps, television sets, and computers. Thus, if the electricity grid is not expected to arrive in the near future or if diesel fuel is unavailable or too expensive, a PV system may offer the least-cost technology for providing electricity service. If this rapid assessment determines that PV is a viable option, it results in a brief concept for a possible project and the plan for its preparation. The project concept is discussed with stakeholders and independent specialists, including off-grid renewable energy specialists, and is adjusted as appropriate. The plan for project preparation takes into account an assessment of available information and activities to be undertaken during preparation to fill gaps and generate additional and improved data. The second phase of project development is the preparation of the PV implementation plan. This is accomplished with the assistance of several specialists, including a PV technical specialist, and involves working closely with lead organization managers and specialists, broad-based stakeholder consultations, and multiple iterations. The third phase of project development, procurements and contract management, involves securing firm financing commitments (including those for post-project recurrent costs), developing tender packages, tendering and contracting, and contract management. The fourth phase, long-term operation, is where too many projects fail. In summary, this toolkit is, at a minimum, a checklist of key issues to address in developing an institutional PV project. While it is not a technical manual, nor a substitute for using professional PV specialists to size, configure, and specify system and maintenance requirements, it offers practical operational guidance to assess, develop, and implement projects with PV systems in ways that enhance cost effective supply and sustainable post-project operations. The guidance offered herein demonstrates that the opportunities for effectively addressing the issues to establish the basis for sustainability are many.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2024(Washington, DC: World Bank, 2024-08-01)Middle-income countries are in a race against time. Many of them have done well since the 1990s to escape low-income levels and eradicate extreme poverty, leading to the perception that the last three decades have been great for development. But the ambition of the more than 100 economies with incomes per capita between US$1,100 and US$14,000 is to reach high-income status within the next generation. When assessed against this goal, their record is discouraging. Since the 1970s, income per capita in the median middle-income country has stagnated at less than a tenth of the US level. With aging populations, growing protectionism, and escalating pressures to speed up the energy transition, today’s middle-income economies face ever more daunting odds. To become advanced economies despite the growing headwinds, they will have to make miracles. Drawing on the development experience and advances in economic analysis since the 1950s, World Development Report 2024 identifies pathways for developing economies to avoid the “middle-income trap.” It points to the need for not one but two transitions for those at the middle-income level: the first from investment to infusion and the second from infusion to innovation. Governments in lower-middle-income countries must drop the habit of repeating the same investment-driven strategies and work instead to infuse modern technologies and successful business processes from around the world into their economies. This requires reshaping large swaths of those economies into globally competitive suppliers of goods and services. Upper-middle-income countries that have mastered infusion can accelerate the shift to innovation—not just borrowing ideas from the global frontiers of technology but also beginning to push the frontiers outward. This requires restructuring enterprise, work, and energy use once again, with an even greater emphasis on economic freedom, social mobility, and political contestability. Neither transition is automatic. The handful of economies that made speedy transitions from middle- to high-income status have encouraged enterprise by disciplining powerful incumbents, developed talent by rewarding merit, and capitalized on crises to alter policies and institutions that no longer suit the purposes they were once designed to serve. Today’s middle-income countries will have to do the same.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Women, Business and the Law 2024(Washington, DC: World Bank, 2024-03-04)Women, Business and the Law 2024 is the 10th in a series of annual studies measuring the enabling conditions that affect women’s economic opportunity in 190 economies. To present a more complete picture of the global environment that enables women’s socioeconomic participation, this year Women, Business and the Law introduces two new indicators—Safety and Childcare—and presents findings on the implementation gap between laws (de jure) and how they function in practice (de facto). This study presents three indexes: (1) legal frameworks, (2) supportive frameworks (policies, institutions, services, data, budget, and access to justice), and (3) expert opinions on women’s rights in practice in the areas measured. The study’s 10 indicators—Safety, Mobility, Workplace, Pay, Marriage, Parenthood, Childcare, Entrepreneurship, Assets, and Pension—are structured around the different stages of a woman’s working life. Findings from this new research can inform policy discussions to ensure women’s full and equal participation in the economy. The indicators build evidence of the critical relationship between legal gender equality and women’s employment and entrepreneurship. Data in Women, Business and the Law 2024 are current as of October 1, 2023.Publication Digital Public Infrastructure and Development(Washington, DC: World Bank, 2025-03-11)DPI is an approach to digitalization focused on creating “foundational, digital building blocks designed for the public benefit.” By providing essential digital functions at society scale that can be reused across sectors, DPIs enable public and private service providers to build on these systems, innovate, and roll out new services more quickly and efficiently. Common systems built as DPIs include digital identity and electronic signatures, digital payments, and data sharing. However, to provide DPI functionality, these systems must embed principles such as inclusion, openness, modularity, inclusivity, user-centricity, privacy-by-design, and strong governance. This paper provides a common framework and primer on DPI for policymakers, practitioners, WBG staff, and the broader development community, including: • DPI Concepts and Theory of Change: This includes a working definition of DPI and its core characteristics, including the role of the private sector, how DPI differs from past approaches to digitalization, and the relationship between core DPI systems, sector-specific systems, other digital technologies, and broader ecosystem enablers and safeguards. The paper also articulates the potential benefits of DPI across a range of public and private sector services, as well as risks and challenges for implementation and adoption. • Considerations for Implementation: Drawing on the experiences of a diverse set of countries across different regions, income levels, and DPI approaches, the paper identifies common trends for building, scaling, and using DPIs that are safe and inclusive. This includes identifying what we know (and do not yet know) around different DPI design choices and models, implementation strategies, procurement, issues around use case integration and sequencing of DPI, and more. • Principles and Practical Lessons: Finally, it summarizes key lessons from countries’ experiences with DPI to date, highlighting critical success factors and risk mitigation strategies for policymakers, practitioners, and development partners. A separate volume provides examples of DPI from countries around the globe. By leveraging the opportunities presented by DPI, countries can accelerate their digital transformation journeys and achieve more inclusive and sustainable development. The World Bank Group is committed to supporting this crucial endeavor. The WBG’s new Global DPI Program will address key knowledge gaps and support countries in building safe, inclusive, and transformative DPI.