At first glance, Simpa Networks, which currently serves customers in Karnataka, India has a mission that seems simple: "to make modern energy simple, affordable, and accessible for everyone." Simple, maybe; lofty, indeed. Energy affordability is the heart of the problem when it comes to providing the over one and a half billion people in the world who don’t have energy with energy.
As noticed over the last thirty years, notably with the Grameen Bank’s microcredit schemes, targeting the bottom of the pyramid is actually an economically smart decision. Social businesses like Nuru and d.light have been offering affordable solar lanterns to people in the Majority World, which are alternatives to kerosene-powered lanterns that are expensive and dangerous.
However virtuous Simpa Networks' mission, the substance is really in the innovative business model. Using flexible and scalable data-driven pricing, buying solar energy is akin to sending a simple SMS. Simpa Networks calls this pricing system "Progressive Purchase." How does it work? Customers first make a small down payment for a solar PV system and then the rest works much like a pay-as-you-go cellphone service: customers pre-pay for energy and then can "top up" in small installments that they set. All of this can be done through a cellphone. Each time a user pays, it goes toward the end price, which, once completely paid off (that usually takes a family 3 to 5 years), opens up the system for energy.
In essence, the "Progressive Purchase" model makes crucial products more affordable."At the core, we're making valuable things affordable by separating the thing from the service it provides. That thing is a solar energy system," Paul Needham, the co-founder and president of Simpa Networks told Fast Company. "We are charging for services that people value, at the moment they value it the most."
In the Majority World, mobile phones have expanded at a rate that many didn't epect, and consequently, have had a profound impact on social and economic life from the Caribbean to India, which is why mimicking a similar model is potentially a way to make change similar to what we’ve already seen with cellphones. The bottom line is that the consumer base in India can afford a solar home system, just as they can afford a cellular service, through small payments that they set themselves, and pay for whenever they want.
Simpa Networks has launched in India but hopes to expand, and has a business model that can scale and become a global example for serving the bottom of the pyramid.
Simpa Networks Website
Simpa Energy India Pvt. Ltd.
635-2, 17th H Main, Koramangala 6th Block
Bangalore, Karnataka, 560 095
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