Pay-As-You-Go: How a Business Model Is Helping Light Millions of Rural Kenyan Homes with Solar

The government of Kenya has been trying to expand the electricity grid for decades, with little success—80% of Kenyans are still living without access to the grid. An alternative solution, off-grid solar lighting products, such as solar lanterns and solar home systems, increasingly provide Kenyans with decentralized clean energy. Kenya’s private sector market for off-grid solar lighting products has been developing since the 1980s, yet the key to rapid market growth was the introduction of a pioneering pay-as-you-go business model in 2011 that made solar products affordable for poor rural customers. Today, with almost 30% of all off-grid households using some type of off-grid solar lighting products, Kenya is a market leader. Other factors that have encouraged market growth include the massive need for power in areas where grid electricity is not available, the high cost and unreliability of grid power where it is available, a value-added tax exemption on solar products, numerous education and awareness campaigns, and expensive kerosene. However, poor quality products present a major challenge. This challenge will have to be overcome for the market to reach its full potential and to ensure that these products represent an effective and lasting lighting solution.