- As climate tech gains momentum globally, off-grid solar provider d.light projects that over 500,000 customers will benefit from its loyalty program by December 2024.
- Under the deal, customers who make regular payments on their PayGo products will redeemed for discounts on future purchases and power tokens.
- One of the most notable innovations in the climate tech sector is the pay-as-you-go (PayGo) model, where customers pay for products in installments.
In a first in Africa, d.light, a global provider of solar-powered household products and affordable finance for low-income households, has launched a new customer loyalty program, targeting approximately 500,000 clients across Africa.
The plan, dubbed “d.light Points Program”, targets customers in Kenya, but the firm says it will be extending the offering in its Uganda, Tanzania, and Nigeria markets later this year.
Donal Connolly, Director of Credit at d.light, said, “Our customers have had a tough time lately. Months of high inflation in many of the countries we operate in along with job, and income uncertainty in climate-impacted rural areas have put pressure on households and communities. This includes being able to access, and pay for their energy at home.”
The company projects that more than 500,000 customers will benefit from the program by December 2024. d.light Points Program rewards customers who make regular payments towards their PayGo products with points that can be redeemed for discounts on future purchases and other rewards such as tokens for free days of power.
The company launched the program following 12 months of customer research involving focus groups, surveys, and one-to-one interviews. Information on points, and rewards are available to customers via SMS or USSD messaging or on the d.light mobile app. What’s more, customers can redeem the points they earn over the phone or using the app.
d.lights offering comes at a time when industry insights show that climate tech is evolving as one of the most viable routes to electrifying half of the 685 million people in Africa who still lack electricity today.
The power of climate tech in revolutionizing energy access
In the face of growing energy demands and the urgency of addressing climate change, climate tech is fast becoming a beacon of hope offering solutions that extend far beyond traditional energy systems. One of the most promising sectors within this realm is off-grid solar power, which plays a pivotal role in connecting millions of people to reliable and sustainable energy sources across the globe.
This sector, exemplified by companies such as d.light, is not only providing essential energy access, but also driving economic growth, enhancing financial inclusion, and fostering climate resilience.
In July 2024, d.light made headlines with the announcement of a $176 million securitization deal. This milestone, as argued by Laura Fortes, Senior Project Manager Access to Finance at offgrid alliance GOGLA, underscores the growing confidence of the investor community in Africa’s solar market.
Fortes notes that such deals illustrate the sector’s potential to attract substantial investments, even in challenging economic environments such as the current phase where there is a slowdown in startup investments in Africa.
The significance of d.light’s deal lies not only in its size but also in its structure. Securitization is a financial mechanism that pools various forms of debt and sells them as bonds to investors, offering an avenue for financing in the off-grid sector.
This approach is crucial for scaling up operations, as it provides companies with the liquidity needed to expand their reach and impact. The involvement of national banks and institutional investors in these deals signals a shift towards mainstream acceptance and support for climate tech solutions.
Read also: Climate tech startups in Africa defy odds, see record surge in financing to $325 million
Impact of off-grid solar in transforming lives
The off-grid solar sector has already made a profound impact, transforming the lives of over 490 million people worldwide. Backed by donors, financiers, and resilient companies, this industry is reaching some of the most vulnerable communities, providing them with access to clean and reliable energy. However, the benefits of off-grid solar go beyond mere energy access.
One of the most notable innovations in this sector is the pay-as-you-go (PayGo) model, which is already in use by d.light. This initiative is fast revolutionizing financial inclusion for low-income households. By allowing customers to pay for solar products in small, manageable installments, the PayGo model makes clean energy affordable and accessible to those who need it most.
PayGo not only lights up homes but also opens up new economic opportunities, as access to electricity enables small businesses to operate more efficiently, farmers to irrigate their crops, and communities to engage in productive activities that were previously out of reach.
In addition to economic empowerment, off-grid solar is making strides in improving health and education outcomes. Solar-powered solutions are being deployed to power healthcare facilities, ensuring that essential services can be delivered even in remote areas.
Schools are also benefiting from reliable electricity, allowing for extended study hours, and the use of digital learning tools. These developments are particularly crucial in regions where the national grid is either non-existent or highly unreliable.
Moreover, the off-grid sector is contributing to climate adaptation and resilience. As climate change intensifies, the need for resilient infrastructure becomes more critical. Off-grid solar systems, which are decentralized and can operate independently of the national grid, are inherently more resilient to extreme weather events.
By providing reliable energy during power outages or in areas affected by natural disasters, these systems are helping communities to adapt to the changing climate and build a more sustainable future.
The investment landscape: Opportunities and challenges
Despite the remarkable progress made by the off-grid solar sector, there is still a significant gap in the financing needed to achieve universal energy access by 2030. According to industry estimates, the overall investment required is in the region of $300 billion, which includes not only basic electricity access, but also power for agriculture, healthcare, and enterprise.
While the sector attracted $425 million in investment globally in 2023, this represents a 43 per cent decrease from the previous year, largely due to the exceptional raise by Sun King in 2022.
Nonetheless, there are encouraging signs of growth in certain segments of the market. Start-up and seed-stage companies saw investments increase, with the productive use segment attracting the highest equity raises. For instance, SunCulture, a provider of solar-powered irrigation solutions for smallholder farmers in Africa, raised $27.5 million in Series B funding in April 2024. This demonstrates the potential for off-grid solar to drive not only energy access but also broader economic development, particularly in the agricultural sector.
As the off-grid sector continues to evolve, it is becoming an increasingly attractive market for Africa-focused investors. Since 2023, the sector has accounted for 25 percent of the total amount invested in start-ups in Africa. However, it has only received about one-seventh of the finance it needs to reach its full potential.
To bridge this gap, there is a need for more innovative financing solutions, such as securitization, that can unlock new sources of capital and accelerate the expansion of off-grid solar across the continent.
The future of climate tech: A global priority
The promise of climate tech, particularly in the off-grid solar sector, is immense. As the world grapples with the dual challenges of climate change and energy poverty, there is a growing recognition of the need to invest in sustainable and resilient energy solutions.
The World Bank and the African Development Bank have recently announced ambitious plans to support the private sector in expanding energy access to 300 million people. These initiatives, coupled with new regional and country-led programs are set to drive progress in the coming years.
Read also: d.light secures $176 million to drive off-grid solar energy usage in East Africa
