Portfolio Learnings: Brighter futures with d.light

The TRANSFORM portfolio comprises inspiring early-stage enterprises whose mission is to meet the Sustainable Development Goals (SDGs) and enhance the lives and livehoods of low-income communities in sub-Saharan Africa and South Asia.

In the latest Portfolio Learnings, a series in which we revisit projects in areas such as energy, sanitation and hygiene, we gain an insight into the progress and findings of solar energy company d.light.

d.light brings to market a new level of energy access and quality of life for customers and small businesses through developing Pay As You Go (PAYG) Solar Home Systems (SHS) that can power energy-efficient appliances.

The PAYG SHS target an off-grid population and aim at resolving the upfront cost affordability barrier that prevents people from purchasing a solar system. The SHS can also power other energy-efficient products that can support micro-entrepreneurs.

In collaboration with TRANSFORM, d.light piloted its solar energy business – designing, manufacturing and delivering affordable solar-powered solutions to underserved communities – in six Kenyan counties based on mobile technology-enabled financing.

TRANSFORM provided support through Unilever’s Customer Development team in East Africa, who helped d.light to build a multi-channel go-to-market strategy for previously unreached customers. Less than a year later, in 2018, d.light had sold almost 40,000 units of its most comprehensive system, the X850. Now d.light has reached scale, creating 20 billion productive hours, reaching 88 million lives and saving $4 billion in energy-related expenses.

Reliable lighting through PAYG

Many off-grid households in Africa cannot afford to pay upfront to purchase a solar home system, spending more on kerosene and mobile-charging each year. Using d.light’s pay-as-you-go (PAYG) technology, customers can make a modest down-payment and recurring payments towards purchasing these clean, safe and healthier lighting systems.

With the goal of reaching thousands of beneficiaries in Kenya by the end of 2017, d.light received support from TRANSFORM, which provided funding for the staff, marketing, call centre and training costs. The funding also secured the required proof points to attract debt capital to scale the project’s financial offering.

TRANSFORM’s support helped in recruiting and training hundreds of employees, salespeople, commission-based agents and call-centre agents, as well as increase distributors and retail outlets significantly.

Key challenges and learnings

Just over one year since the pilot stage was initiated in July 2017, the d.light team shared a report in which it recognised the main challenges of the project. Among them were decreased sales volumes due to price increase; issues with STV signals; unfavourable tax legislation with the removal of VAT exemptions on ‘accessories’; and the political volatility caused by the presidential re-elections in October 2017.

From the process, they also drew several key learnings that may benefit other early-stage enterprises looking to follow a similar approach:

• Product corrections – The team identified the need to correct the design and technology issues found with the products to avoid any adverse impact on brand and future sales. The quality of television antenna will be upgraded to resolve the signal issues that were experienced by some customers in few areas.
• Positive market response – The initial phase of the pilot witnessed a strong uptake of the X850 system showing that there is interest and demand for solar in Kenya.
• Pricing – The increase in initial down-payments, along with the increase in repayments, resulted in attracting more quality customers and helped to bring down delinquency levels.
• Affordability – An observation period of at least two months is required to assess customer’s affordability capacity. After two months of regular payments, customers are given an option to ‘upgrade’ to a TV. This enables d.light to keep a better check on customer delinquency levels.
• Experience Centres – Experience centres are required for demonstrating the product. As it represents a significant investment by a customer, providing a live demonstration would help drive higher customer confidence in the product.

A cleaner, brighter future

Following the TRANSFORM investment, d.light continues to build the brand further, focus more on televisions and invest in after-sales services, with the opening of more service centres and product drop-off points.

Having already empowered 88 million lives, d.light hopes to provide more off-grid households with clean, affordable energy. For more details of TRANSFORM’s project portfolio, please click here.