Simpa Networks: Making solar power affordable in rural India
Sector: Renewable energy
Challenge: About 400 million people in India live in remote villages and don’t have access to an electricity grid. Millions more have only very limited access to electricity. Although distributed solar based solutions are available, high up front costs make them unaffordable to many remote villagers who have limited income and cannot obtain bank financing.
Solution: Simpa Energy India Ltd. developed a business model that is making clean energy simple, affordable and accessible in rural India. Simpa sells solar-as-a-service to energy-poor households and micro-enterprises. In 2014, OPIC committed to provide Simpa a $3 million loan that it will use to expand its customer base from 5,000 to more than 50,000.
Impact: Solar-powered lighting and cooling dramatically improves the quality of life for energy-poor families and promotes economic activity by enabling small businesses to stay open.
Let there be life
When the sun goes down in rural India, most signs of life disappear. Lacking electricity for even basic lighting, businesses close, children can no longer play outside, or even study indoors. This is the reality for about 400 million Indians, who live in remote villages far from and electrical grid. Many more who have grid access still suffer from frequent and unpredictable power outages.
Simpa Energy India, a subsidiary of Seattle start-up Simpa Networks, developed a basic, portable solar home system that is simple to install and affordable to even poor villagers through a pay-as-you-go model. The basic system provides two or three LED lights, a 40-watt solar panel and a 26 Ah battery. Villagers pre-pay via cell phone based on actual usage and each payment adds to the total purchase price of the solar home system. Once fully paid, the solar home system unlocks and delivers free electricity for the expected 10-year life of the product.
Paul Needham, President and co-founder of Simpa, said that while this basic solar technology has existed for decades, poor villagers often lacked the means to pay for it. OPIC’s $3 million loan will help Simpa invest in the upfront costs of the solar equipment so customer can pay for the energy services that they value
“We have designed a for-profit business model that will ultimately attract mainstream capital, but we have a lot to prove before we can walk into a commercial bank and ask for a loan,” said Needham. “OPIC is able to work with us now to help us scale up our proven model and achieve more scale.” He said that OPIC and Simpa are both committed to rigorous financial standards in lending, and that like OPIC, which carefully reviews business plans of potential clients, Simpa carefully screens its customers.
Demand for Simpa’s solar-as-a-service model has been very strong in rural villages of Uttar Pradesh, northern India, where Simpa operates. The results have been transformative in these villages where there is now more street life and commerce later into the night. Needham recalled an insightful comment by one of Simpa’s rural solar entrepreneurs: “When we provide even four more hours of light each night, we give people more time to work, more time to play, more time to be together, more time for conversation. We not only provide four more hours of light: we provide four more hours of life… every day”.
This project was profiled in 2014