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SOLAR PV Solar PV business models By Wim Jonker Klunne, programme director for the Energy & Environment Partnership Programme (EEP), and Charles Muchunku, an independent renewable energy consultant in Kenya S larger business; however, recently a large number of dedicated solar retailers have emerged. Their survival and success is dependent on effective marketing, supply and distribution models. 2 Pay-As-You-Go (PAYG) Consumer Financing – This is effectively a consumer financing model that takes advantage of mobile money systems and combines this with remote monitoring and control of solar systems to remotely disconnect a system in the event of default. Ownership of the system is transferred once the customer finalises their repayments. The model offers flexible customer repayment options and enables ince 2010, EEP, a challenge fund active in southern and east Africa, has assisted over 200 renewable energy and energy efficiency projects in the region with grant funding during early stages of development and implementation. Through the implementation of these projects, a wealth of knowledge has been captured. This article focusses on the lessons gained from projects in the solar PV sector in east Africa. The fifty solar PV projects, on which the analysis is based, typically use one of the following business models: 1 Retail/Over the Counter – Where solar products were typically sold as an additional product within a MULTI-TIER FRAMEWORK (MODIFIED ‡ ) POWER CAPACITY DELIVERY MODEL RETAIL PRICE DEPOSIT the business to easily and effectively manage a large portfolio of dispersed borrowers. With repayments typically ranging from 6 months to 3 years, proper cash flow management is essential. 3 Consumer Financing (via Partner Financial Institution) – In partnership with a financial institution the PV supplier provides products and associated services while the financial institution provides the consumer financing and collects repayments. 4 Mini/micro-grid – The main advantage of mini-grids over stand-alone solar systems is their ability for connected customers to increase their power and energy MONTHLY COST DAILY FEE Tier 0.5‡ ~ 0.5Wp Retail 5.5 - 10$ Tier 1 3Wp Retail Tier 1.5‡ ~ 8 - 15Wp PAYG 19 – 35$ 0.2 – 1.25$ 6 – 38$ Fee for Service 6 – 9$ 0.15 – 0.2$ 4.5 – 6$ PAYG 62$ 0.6$ 18$ 0.8 – 1$ 25 – 30$ Fee for Service Tier 2 ~ 30 – 50Wp Consumer Financing (via FI) Tier 2.5‡ Tier 3 ~ 80 – 200Wp up to 400Wp - 0 – 1.2$ 0.3$ 30 - 60$ - 400$ PAYG 18 – 25$ 0.8 – 1.2$ 25 – 35$ Fee for Service 55 – 80$ 0.2 – 0.5$ 7 – 14$ Fee for Service 90$ 0.6 – 0.7$ 18 - 20$ Table 1: Comparison of solar PV delivery models by market segment and consumer prices 58 ESI AFRICA ISSUE 5 2016