Pay-as-you-go solar power takes off in Africa

In Kenya the cell phone is being used to transform the way that people consume energy. M-KOPA Solar – the word 'kopa' is Swahili for 'borrowed' – is a Nairobi-based business that has pioneered the idea of "pay-as-you-go" solar energy in Africa. 

The idea behind the business is based on harnessing the broad use of mobile payments in Africa. The industry there is already vast: Nigeria based mobile payments company Paga has more than 2.4 million customers, to give one example.  

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After paying a deposit of around $35, M-KOPA users are given a solar system to install at their homes. Using a mobile payment system on their cell – which can be anything from a top of the range smartphone to an older, less sophisticated model – they then top it up every day to the tune of around 45 cents in order to get energy. 

According to M-KOPA, GSM sensors are placed inside the solar systems to monitor and regulate usage based upon payments. After 12 months of regular payments, users acquire full ownership of the solar system and have access to free solar energy. 

"Once they own it then the energy is free. Our business… basically offers them upgrades for more power," Jesse Moore, co-founder and Managing Director of M-KOPA Solar told CNBC.com in a phone interview. 

The company's website states that more than 10,000 mobile payments are made by users on its cloud platform, M-KOPAnet, every day. 

Part of the idea behind M-KOPA is to displace the use of kerosene as an energy source and encourage the uptake of solar as an alternative. 

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The effects of kerosene use in the home can be damaging to people's health, causing a range of problems including dermatitis. "Kerosene as a lighting fuel is extremely dangerous and unhealthy," Moore said. 

"Kerosene sticks around because… even though it's 'expensive', it's affordable. Affordability in this context means 'I can buy what I need to get through today, then tomorrow I can buy it again'," he added. "Our mission is to save our customers money." 

M-KOPA's commercial launch was in late 2012. The company's latest model, the M-KOPA III, has an eight watt solar panel, two LED lights, a USB phone charger, and a portable, solar powered radio.   

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Today, the company says that it has brought solar power to over 150,000 households in Kenya, Uganda and Tanzania. And with many communities across the world off grid and lacking access to clean, renewable and affordable energy, the potential for a business model like M-KOPA's is vast. 

"We believe we've developed a proposition which has global potential… [but] our core focus is East Africa and we're still really just getting started here," Moore said.