Azuri: Building a Sustainable Pay-as-you-go Solar System in Rural Africa
In most rural areas, access to electricity is a luxury. Most families depend on kerosene or oil lamps to light up their homes after dark. This poses health risk to users and often eats deep into the family’s income. According to the International Energy Agency (IEA), almost 1.3 billion people across the globe lack access to electricity. In Africa, the situation is somewhat grim. In its World Energy Outlook 2015 report, the IEA reported that approximately 634 million people in Sub-Saharan Africa are without access to electricity, with average urban electrification rate at 59% and that of rural, stands at only 17%. The report puts average national electrification rate in the region at a dismal 32%.
A number of social entrepreneurs have risen up to the challenge of bridging the rural electrification gap in Africa. One of such is Azuri Technologies, a UK-based company with subsidiaries in Africa and a regional headquarter in East Africa. Azuri Technologies is working to light up off-grid rural African communities through an innovative “pay-as-you-go” system that help reduce users’ weekly spend on kerosene and phone charging. This ‘pay as you go’ solar system allow end users in rural communities to acquire a solar system by paying in installments rather than owning the system upfront –a plus for those who cannot afford the actual price of the system. An independent Social Impact Study carried out by Planète d’Entrepreneurs on Azuri’s 2-light PayGo Solar home system in Western Kenya between June and July 2014, revealed that users were able to save 2.3 hours per week on travelling to purchase kerosene or charge their mobile phones. They are also proud to have been able to provide a lighting source for their children to study.
Rural Reporters had a conversation with the General Manager of Azuri East Africa, Mr Snehar Shah, on how Azuri Technologies is working on its grand vision to bring electricity to everyone in Africa through an innovative and sustainable “pay-as-you-go” system.
Photo Credit: Azuri Technologies
Hello Mr Shah, could you please briefly introduce yourself to our readers?
Snehar Shah is General Manager of Azuri East Africa. Snehar brings 20 years of expertise in investment, finance, and business development to Azuri. Until recently Regional Chief Financial Officer of mobile towers business, Eaton Towers, Snehar has a strong history in the telecoms and consumer services markets including with mobile operator Orange where he was head of the company’s mobile money business unit.
What is the idea behind Azuri technologies and how does it operate in rural Africa?
Azuri Technologies is a commercial provider of PayGo solar home systems to rural off-grid households. With the widest reach of any solar as a service offering in sub Saharan Africa, the company is addressing the problem of energy access that affects 600 million off-grid consumers. Azuri has combined solar and mobile technology to allow customers to access power and consumer devices on a pay-as-you-go basis, providing affordable, clean and safe consumer services, driven by renewable energy, for as little as half the cost of the fossil fuels being replaced. Using the latest low-power appliances and advanced power management technologies, Azuri enables access to lighting, phones, radio, TV and Internet access in affordable packages for rural households, without the need for grid power.
Kindly give us a clear description of Azuri products, its unique features and how it works.
Azuri provides entry-level solar home systems for off-grid households. The entry-level product offering, Azuri Duo, has a 5 watt PV module and a long-life Lithium Iron Phosphate battery, and is supplied with two 75-lumen LED lights. It provides users with eight hours of lighting for two rooms and mobile phone charging. Azuri Quad, features a 10 watt solar panel and long-life Lithium Iron Phosphate battery with four high brightness LED lamps providing a total output of 475 lumens to light a whole rural household for eight hours per night and a USB port for phone mobile charging. Incorporating top quality, European-designed LED based lighting modules, the Azuri Quad system provides a lighting quality which is more akin to that of on-grid products in developed markets. The system also includes a compact, rechargeable radio for 12 hours continuous play, with quality speakers to suit both internal and external use.
Photo Credit: Azuri Technologies
Conventional solar home systems work well in full sun but on cloudy days, most will turn off early at night, leaving households in darkness. In April 2016, Azuri introduced HomeSmart; the world’s first self-learning, artificial intelligence in small solar home systems that automatically adapts to each customer’s individual needs to guarantee light at night-time, whatever the daytime weather. Azuri Quad features unique HomeSmart technology, which ‘learns’ the customer’s usage patterns and then manages power provision in order to provide the best experience based on the available battery power, allowing users to depend on solar even in poorer weather conditions. For example, if a customer typically uses power morning and evening, the system will automatically adjust the brightness of the lights in the evening and the rate of phone charging on days when there is less sunshine to meet the duration of light that the customer is used to. These changes are normally imperceptible to the end-user. In this way, HomeSmart brings “permanent light” to consumers for the first time.
Is there a need to train consumers on how to use the device(s) or is it a simple-to-use tech device?
Azuri provides an end-to-end service working closely with its partners in country. Customer service including one-to-one education about the product and service offering is paramount. When the solar home system is installed for the first time, the installer will explain a number of things to the customer including how their solar home system works, how to top up simply with their mobile phone and how to look after their system. Local support is available throughout the pay-back period, to ensure customer satisfaction, and therefore payment. To process payment and top-up code delivery and aid distributors with customer support, Azuri has developed an extensive Azuri Business System (ABS) combining a cloud-based platform and direct access to each distributor’s field agents via smartphones.
Customers require certainty that when the light is switched it will come on, irrespective of whether the previous day was sunny or cloudy. Azuri’s HomeSmart technology allows for a much more consistent customer experience, and meets the requirement to deliver simple, accessible power to low-income rural consumers. Azuri aims to deliver a simplified, highly accessible service that delivers tailored benefits and peace of mind for each customer. The service aims to invisibly integrate into the customer’s lifestyle so that they can enjoy the experience that the technology enables.
On the average, how many homes has Azuri technology been able to cover since inception of operating in rural Africa? In other words, how is the adoption rate progress?
There is a burgeoning demand for Azuri’s services across off-grid regions in sub-Saharan Africa. As a pioneer of pay-as-you-go solar power when it first entered the Kenyan market in 2011, Azuri has since expanded its reach outside the home of Africa’s ‘Silicon Valley’ to serve some 80,000 households across 12 African countries. Azuri’s HQ is located in Cambridge, United Kingdom, with staff based in Kenya, Uganda, Ghana, Ethiopia and Tanzania and a regional HQ based in Nairobi.
Photo Credit: Azuri Technologies
How does Azuri’s pay-as-you-go model work and how sustainable do you see this model revolutionizing renewable energy development in Africa?
The process starts with an Azuri solar home system being installed at a customer’s house. The equipment will start storing energy straight away, but in order to access this energy, the customer must top-up their unit with credit. The customer uses a mobile money service from their phone to send the correct amount and receive a unique top-up code via SMS from Azuri in return, which they can type into their unit. The system then provides power for the period purchased (typically 1 or 4 weeks), after which the unit automatically locks again, until another code is entered.
During the credit period, the consumer has access to all the energy generated by the solar home system, which provides many times more light than the kerosene lamps it replaces, without the risks. In addition, customers can charge their phones from the built-in USB port, removing the need to travel to town and pay for phones to b e charged and optionally may power a range of consumer devices such as radios. Over the course of typically 18 months, the purchase of top-up pays off the cost of the solar home system. After this time, the customer fully owns the system and can use it to access clean, renewable energy with no further cost. The AzuriPayGo system empowers base-of-pyramid consumers to make relevant and sustainable choices in managing climate change while also reducing their energy spend.
Azuri sees potential for distributed solar to be disruptive in the path of development. The decentralised approach of powering each household individually dramatically reduces the rollout time to new customers, allowing new ‘Azuri’ communities to be created in weeks rather than years. The gap for what you can provide with stand-alone power and the cost of connecting people to the grid is growing. The PayGo model of distributed power is becoming a genuine alternative to the grid.
For consumers, what is the cost/economy advantage of using Azuri technologies?
By carefully matching product to market requirement, and tailoring the length of the pay-back period region by region, Azuri is able to price the top-up as much as 50% lower than the customer’s previous spend on kerosene and mobile phone charging. In effect, the switch to solar power is better than free to the end user. Customers pay typically around $2-3 per week over the course of 18 months. In Kenya, Azuri’s Quad solar home system provides customers with four LED lights, mobile phone charging and a rechargeable radio for KES 50 per day. The new Duo product with two lights and charger requires no deposit and equivalent daily payments as low as KES 31.50 per day.
Photo Credit: Azuri Technologies
For Azuri, how has this pay-as-you-go business model affect the company’s revenue so far?
Azuri works with local distributors who finance the products for customers and we ensure that we have the appropriate systems and processes in place to recover the revenues from customers. Additionallywe are supported in many cases with results based financing initiatives from DFIs etc.
What is the biggest challenge at the moment for Azuri Technologies in bringing sustainable solar power to Africa and how is your company managing these challenges?
The greatest barrier to market is geographic; target customers are widely dispersed, making product delivery expensive. To meet this challenge, Azuri maintains an ecosystem of regional distributors, who already own and manage agents within established ‘last mile’ distribution channels. Through its existing partnerships, Azuri has reached isolated rural communities that would otherwise have been inaccessible. Reciprocally, with Azuri’s support, SMEs can grow their business at a pace to meet the huge customer demand for the solution. For example, in Kenya, one partner grew from a single entrepreneur to a team of six full-time and 50 part-time sub-dealers, installers, and top-up card sellers in the space of 18 months. Azuri’sextensive Azuri Business System (ABS) combines a cloud-based platform and direct access to each distributor’s field agents via smartphones. This use of state-of-the-art cloud computing enables Azuri’s local partners to go to market quickly and effectively without having to implement any new IT infrastructure and provides seamless business monitoring and analysis for partners. Azuri is not tied to any particular mobile payment system but works with all mobile money payment methods to provide choice and cost effectiveness for consumers. Azuri works even if there is no mobile coverage in the customer’s household, allowing deployment in even the remotest villages.
What is Azuri’s grand vision on rural electrification? And so far, how will you say Azuri technologies have helped improve rural electrification in Africa?
Azuri aims to go beyond lighting, to provide each customer with TVs, internet access, entertainment and a range of services. Solar is a stepping-stone whereby the customer starts with lighting and maybe a radio and phone charging and progressively moves up to larger devices. Solar can be leverage for productive use applications, to enable people to earn more money and increase their standard of living.
Azuri’s innovative PayGo solar is commercially viable offering, which is compatible with the African rural economy, and has significant ability to scale, without requiring government handouts or subsidies. The physical autonomy of this technology allows it to operate in the market like consumer electronics; it can be rolled out at the same speed and with the granularity of modern portable devices, long before major infrastructure projects have even left the planning phase. As such, Azuri believes that distributed PayGo power has the potential to do for renewable energy adoption what the mobile phone did for the landline.
Photo Credit: Azuri Technologies
Can you cite an example of how Azuri solar technology changed the life of your customers?
A large number of Azuri’s customers are small-holder farmers. Providing good lighting for the home enables rural farmers to work later in the fields and to prepare produce for sale after dark, increasing their productivity even before new knowledge is applied. Farmers also benefit from accessing power to charge their mobile phones so that they can save money, stay always connected and run their business more effectively. With the growing access to a smartphone, and the means to charge it at home, farmers can access information directly via the web. There are also the added benefits of watching pre-loaded videos, making information more accessible, particularly where literacy may be low.
Previously constrained by the rising and setting of the sun, many women in rural households now have more flexibility to organise their own time. This greater degree of freedom is one of the defining characteristics of an electrified household, and an important step towards a connected lifestyle. With better lighting, tasks can be completed more competently and with less strain. Mobile phone charging at home saves the time and cost of journeying into town to rent a charging point. Rechargeable radios mean not having to travel to market to buy new batteries every few weeks. This provides even more choices and supports the concept of a work-life balance. Having completed everything they would normally do in a day in less time than before, and still with electrical light for hours in the evening, many women describe how they can for the first time choose some activities based around their interests, rather than just their obligations.
Personnel from Oxford and Cambridge Universities undertook studies in 2012 and 2013 respectively, in Kenya, Uganda and South Sudan (Oxbridge studies). Results showed that people were spending a total of ~$13/month on fossil fuels; more than double what they now spend on Azuri. A typical customer saved up to $70 in the first year of pay-back to help pay for school fees or reinvestment of the money into their business. Customers with businesses extended their opening hours on average by 2.5 hours per day, and 100% claimed they were making more money. Children were studying for an average of 2 hours extra a night and were more motivated.
Is there a way Azuri is giving back to the rural communities where it works?
The AzuriPayGo business model also supports and fosters a local, sustainable economy, as local people are recruited by distributors as telephone operatives for customer support, technicians to complete installs, and as local sales agents, benefitting from on-going commission incomes from the regular top-up sales. Women have also played a significant role in ‘last-mile’ distribution of Azuri systems, and are key to educating prospect customers on benefits which the women of the household in particular will gain from clean, electric lighting.
How would Azuri extend reliable source of energy to rural and remote areas in East Africa in the nearest future?
Azuri was one of the first companies to combine mobile and solar technology in this way, and in several of the regions it currently operates in across sub Saharan Africa, it is still the only pay-as-you-go solar home system available. Azuri is committed to investment in Africa and has created a regional HQ, , headquartered in Nairobi. As of April 2016, there are some 40 Azuri staff, of which the majority are based locally in Africa and over 400 in its partners. Azuri and its partners are building skills locally and not just providing a product.
In contrast to a product purchased on microfinance, Azuri provides a full Service Guarantee – if for any reason the product is not fully functional, the customer does not have to pay. With little or no upfront cost, this gives the customer the confidence to purchase without the risk of debt, knowing that they are paying for service rather than for equipment. This removes risk from the consumer and makes it easy for individuals to take the step to adopting new technologies through its ‘Energy Escalator’ pathway. Customers are able to progressively upgrade from entry-level products to those with more lights, radio, TV, Internet and productive use services. The first customers ‘unlocked’ their systems in 2013 in Kenya and since then many thousands have completed the PayGo journey.
From your experience in working in rural Africa, what will you say is the most important thing to know when bringing in “solutions” to the rural community. Is there a story behind this thought?
Azuri has extensive experience of bringing a solar service to rural communities across East, West and Southern Africa. It has been important to engage the rural village chiefs in the process to ensure their support. Each country presents new challenges and opportunities. It has been key to ensure the cost of solar power on a pay-as-you-go basis is lower than the kerosene and the mobile phone charging fees that people pay, so it is actually net cheaper to have the solar power. This works extremely well right across sub-Saharan Africa.
How do Azuri plan to expand and scale up in the coming years? Are there expansion plans in view?
Azuri is focussing on the 600 million people across sub Saharan Africa that lack access to the grid. Off-grid power in emerging markets represents a new global industry that is set for rapid expansion, and one where Azuri has been at the forefront. The whole industry is still at less than 1 percent market share of the number of people who still don’t have access to electricity. This number is increasing with the population grown rather than going down. Azuri first entered the Kenyan market in 2011 and has since expanded outside of the home of Africa’s ‘Silicon Valley’ to understand and leverage opportunities in other African off-grid regions. The market varies between countries, including climatic conditions, which presents an opportunity for Azuri’sHomeSmart technology to further benefit customers. This is particularly beneficial in some West African countries where the rainy season can impact the available sunlight.
Azuri aims to go beyond lighting, to provide each customer with TVs, internet access, entertainment and a range of services. Solar is a stepping-stone whereby the customer starts with lighting and maybe a radio and phone charging and progressively moves up to larger devices. Solar can be leverage for productive use applications, to enable people to earn more money and increase their standard of living.
