Source/author : SIDA & Schatz Energy Research Center & United Nations Capital Development Fund
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Off-grid solar clean energy systems present a promising alternative to traditional fuels. In addition to providing superior lighting services, these systems can also power a variety of appliances. But what drives lowincome customers to adopt such off-grid energy solutions? Can financing instruments such as pay-as-you-go (PAYG) plans play a supportive role in driving adoption? And to what extent can the purchase and use of PAYG solar systems drive digital financial inclusion?
To gain a better understanding of off-grid solar adoption patterns, we carried out a mixed-methods study in Uganda involving 554 households. Participating households had bought either a solar portable lamp (SPL) using cash, a mini-solar home system (SHS) using PAYG financing, or a larger SHS using microcredit in 2015, and we tracked their energy product purchasing behaviour through early 2017. The study evaluated whether adoption followed an ‘energy ladder’ pattern for solar products in which buying a small product (e.g. SPL) contributed to subsequent purchases of larger systems. It further investigated the role of flexible financing in aiding the adoption of solar products, and the extent to which the purchase and use of PAYG solar devices can contribute to increased digital financial inclusion.
The study used a combination of telephone customer surveys, comprising an initial survey (n=554) and follow-up survey conducted in two regions of Uganda between mid-2016 and early 2017 (n=498), and in-person customer interviews (n=105) conducted in the field. In addition, the study analysed data on mobile money transactions obtained from MTN Uganda for the customer sample (n=458). The research further draws on field observations about market conditions, and interviews conducted with retailers.2 To fill in key details that influence adoption, we mapped locations of retail shops and collected other delivery chain details in the districts selected for the study (Section 4).