Tag Archives: innovation

Pay-As-You-Go (PAYG) Models for Cooking Fuels – Innovation for the Poorest Consumers

Daniel Kerr from UCL writes on innovative pay-as-you-go models in use for cooking energy service provision.

In the last 2-3 years, a handful of thermal energy services companies in the developing world, specifically in Sub-Saharan African countries, have begun to take advantage of pay-as-you-go (PAYG) consumer financing models in their energy businesses. These models have significant advantages in comparison to direct purchase, hire-purchase or micro-credit models when dealing with the poorest consumers in societies, for example those living in informal settlements in urban or rural areas. Some companies are taking advantage of these models for selling clean cooking products, such as stoves themselves, whereas others are using this payment structure for cooking fuels.

One company in Kenya taking advantage of these innovations is KOKO Networks. This organisation seeks to offer an integrated neighbourhood-level clean cooking solution with smart technology, via their KOKO points, cloud-connected commerce hubs where consumers and vendors can come to refill the products on sale or make purchases. Currently the company is offering the SmartCook product at these sales points, which is a two-burner clean cookstove with an integrated fuel canister. The fuel used is marketed as Mafuta smart, which is an ethanol fuel derived from molasses manufacture.

What is particularly innovative about this system is that the sales hubs for the company have in the automated purchasing stations for the fuel for the cookstove system. These dispensers refill the provided fuel canister (known as a kibuya smart canister) with the cookstove system, and customers can refill their canister from as little as KHS30 (US$0.29) at a time, offering significant flexibility for the consumer, without the “poor people’s premium” (higher per-unit prices charged for small amounts of consumable products) seen in other commodities. The company operates on a concession business model, with interested parties either setting up their own fuel supply arrangements for the fuel to service their settlement, or purchasing equipment and fuels from KOKO themselves.

KOKO Networks KOKOPoint in store in Nairobi. Customers can purchase a stove or replacement fuel from the kiosk. Image: http://www.globalhearthworks.org/koko/

Other companies in Kenya are taking advantage of PAYG models to enable greater access to their products and services as well. In Nairobi, PayGo Energy is a distribution service for LPG fuels that is using pay-as-you-go services to bring LPG fuel access to a greater number of consumers. The service begins with the installation of an LPG stove, cylinder and smart fuel meter in the home. This smart meter is at the core of the service the company offers, as it automatically communicates to the company when the fuel level is running low, whereupon the company arranges delivery of a replacement, full cylinder to the household. In addition, the system support mobile payments and ordering of fuel replacements, allowing customers to purchase as little as a day’s worth of LPG (around US$0.50) at a time. This logistics system has been adapted to informal settlements, allowing uninterrupted supply to households in informal settlements via motorcycle.

Other organisations are beginning to see the benefits of integrating mobile payment technology with a pay-as-you-go fuel payments model for energy services. KopaGas in Tanzania are another company using smart LPG metering to minimize the challenges posed by last-mile distribution which are typical in providing thermal energy services to communities. This smart gas meter system allows the company to deliver cylinder filling services or replacement full cylinders to communities efficiently, minimising distribution costs. In addition, the company offers a pay-as-you-go service for LPG fuel, as well as offering pay-over-time services for both fuels and cooking equipment. KopaGas has been partnering with EnviroFit, an established LPG equipment and fuel distributor in East and West Africa, in order to scale their service reach.

Through these cases, the market opportunity for offering clean cooking fuels and technologies as an energy service, using innovative fuel and equipment payment models to enable access for the widest range of consumers, can be clearly demonstrated. KOKO Services and KopaGas/PayGo Energy may be using different technology options, but the commonalities in approach exist: offering consumers the ability to purchase small amounts of fuel at a time, via a convenient payment method (either via mobile, at a central filling station, or both), and in the case of the LPG companies, offering consumers the option of household delivery. Through this combination of factors, these companies are breaking the traditional barriers to household thermal energy service delivery, allowing consumers who previously would not have had the financial capacity to afford modern cooking fuels the ability to access these technologies.

– Daniel Kerr, UCL Energy Institute


Global Alliance of Clean Cookstoves (2017) “Pay-as-you-go” technology to boost access to cooking fuel. Available at: http://cleancookstoves.org/about/news/05-30-2017–pay-as-you-go-technology-to-boost-access-to-cooking-fuel.html

KOKO Networks Home: http://kokonetworks.com/

PayGo Energy Home: https://www.paygoenergy.org/

KopaGas Home: https://www.kopagas.com/


SMEs and Clean Energy for Emerging Markets Event – London, UK

STEPs project partners attended an event, jointly run by the DECC, Knowledge Transfer Network, Loughborough University, the LCEDN and the UKCDS, entitled “SMEs and clean energy for emerging markets: challenges and opportunities”. This event was held on the 29th September 2014 at the Wellcome Trust, London, UK. This event sought to bring together representatives from the academic, government, non-government and private sectors, to discuss the current situation, opportunities and challenges to the growth of small and medium enterprise in the clean energy sector for developing economies. Several plenary sessions were held over the course of the day, and stalls were also present from a wide range of institutions, organisations and companies, including Xavier Lemaire and Daniel Kerr from UCL, presenting the STEPs project.

The day began with an establishing session on the global opportunities for SME development in emerging markets. Presenters from Knowledge Transfer Networks Ltd, SolarCentury and SolarAid highlighted a number of challenges facing clean energy provision in markets globally, particularly in developing economies. These ranged from the challenges of replacing aging infrastructure in developed economies, to those of reaching consumers in poverty in rural areas of developing countries. Consistently highlighted were the sobering figures accepted by the international community on energy access: with over 1 billion people still lacking electricity access, and 2.6 billion projected to lack clean thermal energy access by 2020, the presenters made clear the vast potential for SMEs to bridge the gap in energy services provision to emerging markets.

Following this was a session on innovation in energy services for emerging economies. The presenters, representing X-wind, Buffalo Grid and Renovagen, were all private-sector participants in the event, being entrepreneurs involved in SMEs for clean energy development. The presentations focused on the efforts of the companies to develop products and services for emerging markets. X-wind is a company producing resilient, vertical-axis wind turbines for community-scale deployment. Buffalo Grid produces pay-as-you-go solar-powered electricity and wireless internet base stations for deployment in off-grid communities. Renovagen is a new start-up producing fast-deploying PV micro-grids for off-grid communities, as well as in disaster relief and industrial applications, based on a novel flexible PV array. These organisations shared a number of features: all were looking to expand energy services access in developing economies, and they also all identified the need to tailor the product or service to the challenges of emerging market contexts. For example, resilience was a key feature of X-wind turbines, with low maintenance requirements improving reliability. The prevalence of mobile connectivity in the developing world, particularly Sub-Saharan Africa, was also incorporated into the Buffalo Grid product design, with mobile charging being identified as a key service to offer for increased take-up of the product. This point was also discussed in more detail in the fourth session.

Participants were encouraged to network over lunch and visit the presentation booths. The STEPs project booth received a good amount of interest from researchers and entrepreneurs interested in thermal energy access, and business models for energy access more broadly.

The third plenary session focused on financing and support for SMEs, and access to finance. Representatives from the Shell Foundation, UKTI and Enclude Capital Advisory presented on available and appropriate financing routes and the challenges to financial access in emerging markets, as well as the support available for SMEs from financial, governmental and non-governmental institutions. Appropriate finance for SMEs was a key point of the presentations. In the design of financing mechanisms for small and medium enterprise in developing countries, the type of financial assistance can have a significant effect on the impact of the financing on the company, particularly in transition points between sizes of companies. For example, donor funding is most useful to start-up companies that may not be able to afford market loans for growth, whereas commercial or governmental loans/financing schemes are more useful to more established organisations.

The fourth session sought to clarify the realities of energy services for emerging economies through presentations from a number of organisations and companies with experience in emerging market projects, ranging from humanitarian and aid-sector solar lighting organisations to distributed wind generation providers. Two themes were recurrent in the presentations: the necessity of assessing the nuances of the local and regional market in designing products and services for emerging markets, and the huge potential to be found in integrating products and services in a ‘smart’ fashion, most notably through the use of mobile technology. Mobile signal access has developed significantly faster than electricity access in many emerging markets, and with the immense success of the M-PESA and M-KOPA systems, integrating financial transactions into mobile systems has been proven to be a workable business model. The design of clean energy products is also key to their success in supplanting established traditional technologies in emerging markets. This can be as simple as reducing the height of a cookstove so that it can be used more easily, but can have a significant impact on market penetration.

The final session of the day focused on the impact that academic research and evidence can have in supporting the activities of SMEs working in emerging economies. Speakers from SolarAid, Oxford University’s Power and Energy Group and DFID engaged in discussions with the room on how academic research can assist in the design of business models and market research for SMEs, as well as in simulation, social and demographic analysis and other areas. The concept of innovation synergies with academic research was also highlighted, with the academic sector being able to assist in all stages of product and service development, from needs assessment to testing and evaluation of products, to effective deployment strategies and models.

– Daniel Kerr, UCl Energy Institute