Financial incentives pave the way for commercial energy solutions in humanitarian settings

Three Pay-As-You-Go (PAYGO) solar home system (SHS) companies are now operating in Kiryandongo and Rwamwanja refugee settlements and host communities in Uganda, thanks to a USAID and Power Africa grant programme aiming to de-risk the operations of private-sector companies that want to expand their market reach into displacement settings. As a result, customers have reduced their energy expenditure and have brighter and longer-lasting light, children can study at night, women have greater flexibility in their daily routine, and businesses can extend their operating hours.

Refugee settlements are not typical markets for private-sector companies selling energy products and services since they present additional risks and uncertainty. Lack of data on current energy use and spending patterns, uncertainty of how long refugees may stay in a location, language barriers, and the market distortions caused by the presence of relief agencies can deter companies from viewing these locations as viable markets. 

However, many refugees are spending significant portions of their income on access to poor-quality and expensive lighting and other electricity services. Considering the economies of the surrounding area, refugee settings can offer scalable markets and concentrated demand for services in locations often underserved by national utility providers.

At the core of the 18-month Power Africa De-Risking Pay-As-You-Go Solar Home Systems in Uganda Refugee Settlement Project are grants designed to incentivise private-sector companies to enter this challenging market and serve some of the world’s most vulnerable populations. The grants can be used for staff and travel costs, marketing, training, and funding new sales points, all of which can help the companies establish themselves in these new markets.

Following a competitive call, three PAYGO SHS companies—Brightlife, Fenix International, and SolarNow—were selected as grantees in June 2019. Energy 4 Impact has been working with solar company Green Powered Technology as USAID and Power Africa’s implementing partners and have helped to design, launch, and select the winning companies and are responsible for ongoing management, monitoring, evaluation, and learning from the project.

Since June 2019, the three SHS companies have sold more than 3,400 PAYGO SHSs in the two refugee settlements and host communities, resulting in the creation of more than 100 local jobs. 

The new customers are realizing their aspirations of having better-quality and cleaner lighting sources. After buying an SHS made up of three lights and mobile charging capability, Amita Rose, a South-Sudanese refugee in the Kiryandongo settlement, is saving money.  Prior to using the system, she spent 1,000 UGX (0.27 USD) per day on kerosene and 500 UGX (0.13 USD) per mobile phone charge. She now pays just 900 UGX (0.24 USD) per day for both her lighting and phone charging needs, a significant savings for Amita.  In the three months she has owned the system, Amita has benefited not only from a cost-savings perspective, but the time-savings of charging her mobile phone at home and the improvement in her children’s school performance from having brighter light by which to study in the evening. 

To date, initial repayment rates have been promising, aligning with the three companies’ wider portfolios.  Lessons and experiences gained through this project are likely to catalyse future private-sector-led energy access interventions and pave the way for other companies to improve livelihoods in other refugee settlements and host communities.