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A handful of innovative companies may soon transform how low-income consumers purchase and pay for cooking fuel. By providing energy services on a pay-as-you-go (PAYG) basis, enterprises are leveraging technology-focused business models to overcome the affordability barrier previously faced by consumers unable to afford the upfront cost of household energy products.
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Traditionally, one of the biggest challenges in switching from solid fuels to cleaner-burning fuels such as liquified petroleum gas (LPG) or ethanol is the initial cost of the stove and the inaccessibility of small quantities of fuel. A series of recently-announced innovations – including smart fuel canisters and mobile money payment systems – aim to enable both stove financing and the sale of clean fuel in more affordable quantities.
In Nairobi, KOKO Networks is using technology to lower distribution costs by launching a network of cloud-connected “KOKOpoint” e-commerce kiosks in small neighborhood shops. Consumers are able to buy a modern two-burner stove with cash or by using a layaway model.
Also in Nairobi, PayGo Energy is developing a pay-per-use service that makes LPG available for households through a smart metering solution. Users pay a reduced fee for the initial installation of a stove, cylinder, and smart meter, after which they spend as little as $0.50 per day for their cooking needs.
In Tanzania, KopaGas has launched a pay-per-use LPG model with support from the GSMA Mobile for Development Utilities Programme and Oryx Energies. KopaGas’ Smart LPG Meter allows customers to use mobile money make payments at price points competitive to charcoal and pay off gas and cooking appliances over time.
These models have the potential to generate meaningful data around customer usage and pricing dynamics; and in turn, improve the product/service offering.
Making cleaner fuels accessible and affordable for low-income energy consumers has proven a massive challenge on the road to universal energy access, but by building on the innovation already beginning to occur and taking cues from other sectors, these businesses and others may be on the leading edge of a revolution to make clean cooking fuel accessible and affordable for all.