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How a Pay-as-You-Go Solar Project Reaches the Poorest Households

Nearly 40% of households (500,000) in Nusa Tenggara Timur province have no electricity despite Indonesia achieving a national electrification rate of 98%. These include 60,000 households on the remote island of Sumba, which count among the country’s poorest and rely on polluting kerosene and firewood for lighting and cooking.

Off-grid systems have become part of the solution in providing last-mile electricity on the island. However, many households are strapped for cash and cannot afford the service.

A local start-up enterprise is experimenting on a lease-to-own arrangement that allows poorer households to pay for solar home systems with goods or services instead of cash. Sumba Sustainable Solutions (3S), registered in Indonesia as PT Sumba Solusi Alam, has developed a setup that turns the noncash payments into cash and minimizes default risk. It has already equipped 2,500 households living on less than a dollar a day (per person) with solar lights and phone charges. It is targeting to sell to 30,000 households in 5 years.

 

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  • Asian Development Bank