Digital payments and smart meters is a revolutionary idea – where users shift to smart, prepaid metering systems and purchase a set amount of power electronically – not only helps customers but benefits utility companies and mini-grid providers by reducing the costs of metering and credit operations.
In turn, digital payments are helping make off-grid power sources like solar and wind more economically viable.
Lymo, who lives in the Kimara neighbourhood of Dar es Salaam, Tanzania’s largest city, is among the many customers of state power supplier Tanesco who now use digital platforms to pay their bills.
Better Than Cash Alliance, a partnership of governments and international organizations published a study that also suggests digital payments can create new business opportunities, increase transparency, and improve cash flow for utilities and off-grid operators.
While most African countries are embracing modern technologies like mobile money transfers, utility bill payments across the continent are still overwhelmingly made in cash, according to the report.
It points out that conventional electricity meters can easily be tampered with. Of 76000 households audited by Tanesco in 2012, 5% were found to be stealing energy.
Tanesco spokesperson Leila Muhaji said prepaid plans are used by most of its domestic customers.
An economics professor at Mzumbe University in Dar es Salaam, Honest Prosper Ngowi, said that the transition from cash to digital payments has helped utility firms boost revenues significantly and cut transaction costs, while delivering “social benefits” to their customers, such as eliminating time spent in queues.
It was estimated that by 2020 digital payment-enabled solar units will provide renewable electricity to 15million households and 75million people. In rural Uganda, customers of Fenix International can access lighting and phone-charging through a solar system that costs 380 shillings a day, but only if they can pay digitally, the report says.
With a aspiring target of achieving universal access to electricity by 2030, Kenya, Rwanda, Tanzania and Uganda are now looking into mini-grids to power rural communities away from the main grid. In Kenya, US-based technology venture Powerhive operates a micro-grid network for rural homes and businesses, using smart meters linked to a cloud-based server.
According to the integrated system, M-Pesa a widely used mobile phone based money transfer service will be used to allow customers to pre pay electricity, while allowing Powerhive to remotely monitor performance, consumption and cash flows.