Several unicorns are developing a new business model for the electric grid that might completely disrupt the energy business.
The business is model is Pay-As-You-Go (PAYG), and it might help bring electricity to the world’s rural poor. The idea behind Pay-As-You-Go is simple, customers pay for electricity before they use it rather than after.
This idea is revolutionary; because when combined with modern technology, it can bring electricity to underdeveloped rural areas. Companies using PAYG can sell generators, or solar electric systems to people with no credit, no credit history, and no access to a bank.
Pay-As-You-Go has the potential to open up a huge market to both electronics manufacturers and utilities. The World Bank estimates that there are around 1.7 billion unbanked adults in the world. Most of the unbanked live in rural areas of developing nations.
How Smartphones can Bring Electricity to the Poor
Ironically enough it is cutting-edge electronics that allow PAYG to electrify developing countries.
The PAYG system developed and deployed by Off-Grid Electric in East Africa works like this. A person with a smartphone buys a solar electric system from Off-Grid. He or she makes the payments over his or her mobile phone using Vodafone’s money transfer app M-Pesa.
The solar-electric system has a wireless connection to Off-Grid Electric. If the customer does not pay, Off-Grid shuts it off much like our cable or satellite TV company cuts you off if you do not pay the bill. Off-Grid’s system combines a lithium-ion battery, solar panels, and electric lights.
The system generates enough electricity for users to hook up computers, sewing machines, power tools, TV sets and other gadgets. That can instantly bring a family in to the 21st century. One of the main innovations is LED lights which allow kids to study and do their homework after dark.
Off-Grid has rounded up some impressive partners including Tesla Energy (NASDAQ: TSLA) the solar-electric company formerly known as Solar City, and the World Bank. Off-Grid has offices in Arusha, Tanzania and Labs in San Francisco.
Interestingly enough, Off-Grid’s marketing plan relies on an old-fashioned American institution that has disappeared from the United States the door to door salesman, author Varun Sivaram reported. The company relies on an army of door to door to salespeople tramping around the country and knocking on doors to move its products.
Bringing the 21st Century to Africa
A German company called Mobisol has even more ambitious plans than Off-Grid Electric. Mobisol wants to bring modern appliances to every home in Africa.
To that end Mobisol is building 80 watt to 200 watt Solar Home systems. The systems can be connected to a range of products including the MobiCharger for mobile phones, stereos, and TV sets. Mobisol’s long term plans include a full range of appliances such as washing machines, dryers, dishwashers, microwaves and ovens.
The MobiCharger can be a real game changer because a poor family can make extra cash by charging people to recharge their phones. Charging is only one example of how entrepreneurs can use electricity. Barbers can use electric hair clippers, women can use sewing machines for tailoring, and storekeepers can hook up electric powered refrigerators, freezers, and ovens.
Mobisol’s biggest competitor is M-KOPA which also sells home solar systems and TV sets in Kenya and Uganda. M-KOPA started as a spin off from M-Pesa that now offering a range of products from its headquarters in Nairobi, Kenya.
A PayPal for PAYG
The most disruptive product at Mobisol might be Paygee a Pay-As-You-Go Ecosystem. Paygee is a complete financial technology platform that offers payment collection &management, workforce management, customer relationship, product & service management, inventory management, and credit management services.
Paygee has the potential to be an incredibly disruptive solution because it can bring the modern economy straight to the developing world’s doorstep. PAYG is what is driving Mobisol’s business and it might drive much more.
Products that might be paid for by Paygee include video games, satellite TV, Amazon-type e-commerce, electricity, and banking just to name a fee. Two potentially super disruptive capabilities on Paygee are the Technician App an Uber for technicians that lets companies recruit, hire, and pay techs anywhere and the Sales Agent App which lets companies set up forces of door-to-door salespeople almost anywhere.
A long-term use for something like Paygee would be selling vehicles to people in Africa. Africans might pay for vehicles via PAYG, the vehicle would shut down if they did not make the payments. Such tech has already been demonstrated in the United States.
Do-It Your-Self Electric Grids
Companies like Mobisol and Off-Grid are only scratching the service of decentralized electricity. A more ambitious startup called me-Solsare wants to build a smart grid from the bottom up.
Unlike Off-Grid, me-Solshare wants to power the entire neighborhood and generate enough electricity to power electric cars. me-Sholshare’s products include the SOLBOX a next generation electric meter that allows anybody with a DC generator to build a smart grid and SOLcontrol a next generation smart meter for Solar Home Systems.
One obvious use of SOLBOX and Solcontrol is for entrepreneurs to set up local or neighborhood electric grids. That might enable people in a village or neighborhood to pool their sources and build a grid. The local storekeeper might augment her income by lighting the neighborhood.
A good way to think of me-Solshare is as a do-it-yourself electric grid. That might sound hokey but it has the potential to be incredibly disruptive. Such small scale entrepreneurship was how the grid began in countries like the United States and Canada.
Me-SOLshare is based in Dhaka, Bangladesh but it has offices in Berlin and Bogota, Colombia. There is also a tech team in Bangalore, India.
Do Yourself Electricity meets the Blockchain
The next logical step will be to combine the blockchain with a payment system like M-Pesa or Paygee.
The Noah Project or NOAHCOIN in the Philippine, BitMinutes, BABB, and Rubius Inc. are all developing “bank on the blockchain” projects that can bring cryptocurrency to mobile phones around the world. The Noah Coin (NOAH) designed to facilitate remittance payments between Japan and the Philippines is the furthest long here.
Noah might be super disruptive because it would enable a Filipino working in Japan to send money to his mother back home. Combine Noah Coin with Paygee and the son working in the United States can buy mom back home in Tanzania or El Salvador a solar electric system and a TV set. That might be followed by a sewing machine and a washer.
There are at least Ethereum tokens that are designed to make electricity a commodity anybody can buy. Romania’s Restart Energy (MWAT) is offering the RED MWAT ERC20 that will be sold to RED franchises that sell electricity like other companies sell phone minutes. Australia’s Power Ledger (POWR) is designed as the basis of a payment platform for electricity. The obvious solution would be to create something like MWAT or POWR for a Paygee-type platform.
The Consumer Revolution is Coming to Every Corner of the Globe
The potential disruption from Pay-As-You-Go electricity is incredible. Hundreds of millions of people might be added to the world’s consumer economy leading to an incredible burst of economic activity. The resulting economic boom would resemble that in the United States and Canada in the 1950s or the boom in China in recent decades.
The amount of money long-term value investors might make from that boom is nearly infinite. There are many companies that will profit from such boom.
Just a few of the big name stocks that will profit from PAYG electricity include: NVIDIA (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Proctor & Gamble (NYSE: PG), Sony (NYSE: SNE), The Walt Disney Company (NYSE: DIS), Samsung (KRX: 005930), Alibaba (NYSE: BABA), PayPal (NASDAQ: PYPL), Visa (NYSE: V), MasterCard (NYSE: MA), Facebook (NASDAQ: FB), Netflix (NASDAQ: NFLX), and Tesla (NASDAQ: TSLA),
A value investor that bets on the economic growth driven by the PAYG revolution in the way Warren Buffett bet on American growth from the 1960s to present. Might reap rewards that are even greater those Berkshire Hathaway (NYSE: BRK.A) generated.
The bottom line is that the PAYG revolution is about to bring the electric grid and the consumer economy to every corner of the world. Investors that grasp the opportunity will make a lot of money.