How to Make Solar Panels Affordable—for Billions

Like the installment plans of the Great Depression, Simpa Networks' "Progressive Purchase" agreements are enabling customers in rural India to get solar power for their homes.

“Upgrading to electricity” is not a phrase most industrialized world denizens think about much, given that it happened a century ago. For 20 percent of people on earth, though, the electric grid isn’t making it to their slums and rural villages—not any time soon. Instead they rely on smelly, smoky, eye-stinging kerosene lamps for feeble light at night.

But solar panels don’t require connection to the rest of the electric grid, and their prices are dropping. One solar panel on a roof and you’ve electrified your house: hello, LED lights and cellphone charging. In some locales, bottom of the pyramid demand for mobile charging is actually driving demand for solar power, with lights coming along for the ride.

Simpa Networks, an Indian company, has integrated solar tech with mobile phone payments. They install a solar panel on the roof and wire it through the house to a mounted box. The controls are assigned a code which the customer punches in when paying via cell. Each payment goes toward ultimately owning the system. Once paid off, the panel produces electricity at virtually no cost.

Simpa Networks has branded their system “Progressive Purchase,”something that may sound more familiar to you as an installment plan, developed back when Ma and Pa sprang for their very first radio, a piano for their parlor, or maybe a Model-T. The buyer put down a deposit and the company extended credit for the balance, paid off at regular intervals. People loved getting their goods right away. Before then, items could only be purchased with cash up front. Few consumers paid enough attention to the arithmetic to realize they were paying very high interest rates and providing juicy revenue streams for sellers. If the buyer stopped payment, the seller repossessed the item—a frequent occurrence during the Depression. 

Installment plans were replaced by general-purpose credit cards introduced in the mid ‘60s. I remember when my father’s arrived, an exciting little piece of plastic with orange and yellow circles on it. Until then, one had separate charge accounts at each store frequented; each establishment had its own billing department. Credit cards were a win-win.

People don’t think of these credit cards as extremely high interest loans, even if that’s what they are. Many people who would not go to the trouble of taking out a specific loan run up balances on inessentials and quickly are buried in consumer debt. Microfinance in its earlier stages maintained strict policies banning consumer lending; microcredit was extended only for income generation. This has loosened up some of late.

The model Simpa Networks (and similar Kenya-based venture, Azuri, and Quetsol in Guatemala) offers is an enlightened installment plan (pun intended). Customers actually lower their weekly overhead by accessing solar power, pocketing the difference. If a customer defaults, the companies turn off the system, but she still benefited from the time she had electric lights and cellphone charging.