Impact of Micropayments and Solar Lighting

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Clientd.light
PartnersM-KOPA Uganda, USAID Development Innovation Ventures
Location: Uganda
Sectors: Energy, Finance
Dates of service: 2013-2014
IDinsight service: Decision-focused evaluation
IDinsight contact: Andrew Fraker, Jeremy Fischer, Dan Stein
Additional resources: Academic paper - Link

Background
Approximately 1.3 billion people lack electricity, with sub-Saharan Africa accounting for about 45% of that figure.[1] In Uganda, roughly 85% of the population lacks electricity, with only 7% of rural households having access to the electrical grid.[2] Moreover, even when a village has grid access, connecting a household can be prohibitively expensive. This presents a huge opportunity to expand clean, affordable, and safe lighting to a large segment of the Ugandan population through off-grid solutions.

Founded in 2007 as a for-profit social enterprise, d.light manufactures and distributes solar lighting and power products designed to serve the more than 2 billion people globally without access to reliable electricity.

Intervention
In 2012, d.light received a Development Innovation Ventures (DIV) grant from USAID to design and pilot the first high-quality, upgradeable solar power system with an integrated pay-as-you-go consumer financing technology. d.light partnered with the asset financing company M-KOPA Solar to provide the innovative mobile payment technology and distribute the system in Uganda. IDinsight was contracted to conduct an impact evaluation of this program.


IDinsight service
In order to measure the impact of the program, IDinsight designed a matching study with difference in differences analysis with these considerations in mind, as a randomized controlled trial would have been too disruptive. The study measured the impact of the d.light solar home system on energy expenditure, productive hours, education, and health.

Results
IDinsight’s analysis found substantial impacts of the purchase of the solar power system on energy spending. Households in the treatment group saved approximately 1.40 USD/week, which corresponds to 77 per cent of the comparison group’s weekly energy expenditure. Assuming this savings stays constant, households would break even on their initial purchase after 3.14 years, and accrue net energy savings of 134 USD over the 5-year expected lifetime of the solar power system. IDinsight also found improved self-reported health and safety outcomes.

Impact
Based on positive outcomes from its first-stage investment, DIV decided to give d.light a Stage 2 grant of 1 million dollars in August 2016. DIV explicitly told IDinsight that their evaluation played a role in the decision to approve the Stage 2 grant. The DIV investment in d.light was just one part of a major capital injection received by d.light in late 2016. This includes an additional 4 million in grants (from the Shell Foundation and the United National Capital Development Fund), 22.5 million in equity investments (from various investors), and an additional 2.5 million in debt. It is unclear how much these other grants and investments were influenced by IDinsight’s research, but it is quite plausible that it had an effect on their decisions.

[1] International Energy Agency. (2013). Population without electricity [statistics]. Retrieved on March 12, 2014 from http://www.worldenergyoutlook.org/resources/energydevelopment/energyaccessdatabase/

[2] https://ec.europa.eu/europeaid/blending/uganda-rural-electrification-project_en