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| | = Overview = | | = Overview = |
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| | Furthermore, an overview table allows to see the arguments side by side. | | Furthermore, an overview table allows to see the arguments side by side. |
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| − | = Why PAYGO is overhyped = | + | = Why PAYGO is Overhyped = |
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| | Blog by Ceniarth: “An Impact Investor Urges Caution on the ‘Energy Access Hype Cycle’”<ref name="Ceniarth’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/">Ceniarth’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/</ref> | | Blog by Ceniarth: “An Impact Investor Urges Caution on the ‘Energy Access Hype Cycle’”<ref name="Ceniarth’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/">Ceniarth’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/</ref> |
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| | Read more at: [http://ceniarthllc.com/ Ceniarth]’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. [https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/ https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/] | | Read more at: [http://ceniarthllc.com/ Ceniarth]’s Blog: Neichin, Greg, Diane Isenberg, and Mary Roach. ‘An Impact Investor Urges Caution on the “Energy Access Hype Cycle” | NextBillion’, 17 March 2017. [https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/ https://nextbillion.net/an-impact-investor-urges-caution-on-the-energy-access-hype-cycle/] |
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| − | = Why the hype is justified = | + | = Why the Hype is Justified = |
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| − | == Investment is needed! == | + | == Investment is Needed! == |
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| | Blog by GOGLA on: “Dear Critics: Here’s Why the Off-grid Energy Industry Needs Impact Investment”<ref name="GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/.">GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/.</ref> | | Blog by GOGLA on: “Dear Critics: Here’s Why the Off-grid Energy Industry Needs Impact Investment”<ref name="GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/.">GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/.</ref> |
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| | Read more at: GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. [https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/ https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/]. | | Read more at: GOGLA: Keane, John, and Laura Sundblad. ‘Dear Critics: Here’s Why the Off-Grid Energy Industry Needs Impact Investment | NextBillion’, 6 April 2017. [https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/ https://nextbillion.net/dear-critics-heres-why-the-off-grid-energy-industry-needs-impact-investment/]. |
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| − | == Why we need the hype == | + | == Why We Need the Hype == |
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| | Blog by The Persistent Energy Capital LLC on: “Hype in the Energy Access Sector (Finally!)”<ref name="Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. https://nextbillion.net/hype-in-the-energy-access-sector-finally/.">Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. https://nextbillion.net/hype-in-the-energy-access-sector-finally/.</ref> | | Blog by The Persistent Energy Capital LLC on: “Hype in the Energy Access Sector (Finally!)”<ref name="Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. https://nextbillion.net/hype-in-the-energy-access-sector-finally/.">Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. https://nextbillion.net/hype-in-the-energy-access-sector-finally/.</ref> |
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| | Read more at: Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. [https://nextbillion.net/hype-in-the-energy-access-sector-finally/ https://nextbillion.net/hype-in-the-energy-access-sector-finally/]. | | Read more at: Persistent Energy Capital LLC: Aidun, Chris, Dirk Muench, and Rodrigo Weiss. ‘Hype in the Energy Access Sector (Finally!) | NextBillion’, 6 April 2017. [https://nextbillion.net/hype-in-the-energy-access-sector-finally/ https://nextbillion.net/hype-in-the-energy-access-sector-finally/]. |
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| | = Overview Table = | | = Overview Table = |
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| | The following table summarises the critique on the PAYGO hype by the blog post of [http://ceniarthllc.com/ Ceniarth] and the two reactions by GOGLA and Persistent Energy Capital (PEC) who both thinks what Ceniarth calls a PAYGO “hype” is a justified and necessary development in order to reach energy access via PAYGO. The table follows 5 categories of arguments: financing, regulation, profitability, consumption vs. productive uses, and target markets. For details and resources, see sections above. | | The following table summarises the critique on the PAYGO hype by the blog post of [http://ceniarthllc.com/ Ceniarth] and the two reactions by GOGLA and Persistent Energy Capital (PEC) who both thinks what Ceniarth calls a PAYGO “hype” is a justified and necessary development in order to reach energy access via PAYGO. The table follows 5 categories of arguments: financing, regulation, profitability, consumption vs. productive uses, and target markets. For details and resources, see sections above. |
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| | = Conclusion = | | = Conclusion = |
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| | It is true, the PAYGO market got a lot of attention during the past years and exponentially more money is lending to push the market. Whether or not we can call this a “hype”, depends on the perspective. Some call it overhyped, others feel the attention is justified. | | It is true, the PAYGO market got a lot of attention during the past years and exponentially more money is lending to push the market. Whether or not we can call this a “hype”, depends on the perspective. Some call it overhyped, others feel the attention is justified. |
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| | Traditional impact investors like Ceniarth might feel that PAYGO is not quite the right approach to reach the last mile customers for achieving universal access to energy. They feel that the hype around the PAYGO approaches might even endanger the path towards that goal. Others (GOGLA and PEC) rather see the fast development of the PAYGO approaches as a “normal” development of new markets. This path will maybe not only focus on the most vulnerable customers, but offers the possibility to reach many more people than other approaches. According to them, like other young markets, the PAYGO market receives the attention that is needed to grow substantially. | | Traditional impact investors like Ceniarth might feel that PAYGO is not quite the right approach to reach the last mile customers for achieving universal access to energy. They feel that the hype around the PAYGO approaches might even endanger the path towards that goal. Others (GOGLA and PEC) rather see the fast development of the PAYGO approaches as a “normal” development of new markets. This path will maybe not only focus on the most vulnerable customers, but offers the possibility to reach many more people than other approaches. According to them, like other young markets, the PAYGO market receives the attention that is needed to grow substantially. |
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| | = Further Information = | | = Further Information = |
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| | *[[Market Development of PAYGO|Market Development of PAYGO]] | | *[[Market Development of PAYGO|Market Development of PAYGO]] |
| | *[[Advantages_and_Disadvantages_of_PAYGO_Approaches|Advantages and Disadvantages of PAYGO Approaches]] | | *[[Advantages_and_Disadvantages_of_PAYGO_Approaches|Advantages and Disadvantages of PAYGO Approaches]] |
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| | = References = | | = References = |
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| | <references /> | | <references /> |
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| | + | [[Category:Financing_Solar]] |
| | [[Category:Financing_and_Funding]] | | [[Category:Financing_and_Funding]] |
| − | [[Category:Financing_Solar]]
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Since the PAYGO market got a lot of attention during the past years and exponentially more money is lend to push the market, it seems that PAYGO approaches were hyped by the media and within the energy access sector.
In March 2017, a blog post explained what was wrong with this hype about PAYGO. A few days later, two blog posts responded to the 5 critiques on PAYGO. This article summarises all three articles in bullet points. Ceniarth shifted its investments away from PAYGO and dared to explain why. GOGLA and Persistent Energy Capital LLC strongly disagree with Ceniarth’s analysis.
Blog by Ceniarth: “An Impact Investor Urges Caution on the ‘Energy Access Hype Cycle’”[1]
Blog by GOGLA on: “Dear Critics: Here’s Why the Off-grid Energy Industry Needs Impact Investment”[2]
Blog by The Persistent Energy Capital LLC on: “Hype in the Energy Access Sector (Finally!)”[3]
The following table summarises the critique on the PAYGO hype by the blog post of Ceniarth and the two reactions by GOGLA and Persistent Energy Capital (PEC) who both thinks what Ceniarth calls a PAYGO “hype” is a justified and necessary development in order to reach energy access via PAYGO. The table follows 5 categories of arguments: financing, regulation, profitability, consumption vs. productive uses, and target markets. For details and resources, see sections above.
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Category
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Critique on Hype by Ceniarth
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Reactions on the critique (by GOGLA and PEC)
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- Financing PAYGO increased exponentially during the past years. (to 200 million USD in 2016)
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Ceniarth thinks that PAYGO investments grow too fast
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GOGLA states that those large investment is not a problem since the sector has been historically underfunded anyway. PEC explains that “there is no investor hype”. Even the mobile phone industry needed several billion dollars per year to reach 75 percent of sub-Saharan Africa. Every industry needs impact investments and PAYGO is in its very early market stages. In 2017, PAYGO will maybe have reached 1% of market potential!
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- Regulations for customer protection do not yet exist
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Ceniarth fears that this hype will have negative effects on the PAYGO customers, while many companies are “operating in a grey area of regulation”.
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PEC assumes that the PAYGO sector will follow the same steps as all new industries: In order to protect customers, regulation will follow the revelations of abuse.
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- Profitability of remote distribution
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Ceniarth argues that the service infrastructure is not profitable in rural, poorer areas: Applying a capital-intensive venture model to rural, physical last-mile distribution does not work in their opinion.
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PEC counters that competition will stress test energy access business models and reveal successful approaches. There are profitable businesses targeting even the lowest-income consumers.
GOGLA argues that with a commercial, demand-driven approach, it is in the companies’ own interest to meet the customers’ needs (quality, after-sales service and customer care).
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- Productive vs. consumption of energy
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Ceniarth fears that without an (increasing) income, customers might increase their consumption (and/or their level of credit lines) leaving them more vulnerable than before. Giving them access to more goods and products increases this vulnerability.
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GOGLA observes that more goods and services is a growth opportunity, not something to be dismayed about! They admit there is a need for both uses: productive use (to generate income) and consumption by households.
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- Target markets of PAYGO products and services
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In the opinion of Ceniarth, PAYGO is not suitable to reach the last mile customers.
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GOGLA responds that the target market is more diverse: all relevant consumers (poor or rich) should get access to relevant supply. PEC argues that the target market of PAYGO is still a young market: investing is always difficult and requires persistence, investors should not miss out on providing adequate risk capital to PAYGO companies.
|
It is true, the PAYGO market got a lot of attention during the past years and exponentially more money is lending to push the market. Whether or not we can call this a “hype”, depends on the perspective. Some call it overhyped, others feel the attention is justified.
Traditional impact investors like Ceniarth might feel that PAYGO is not quite the right approach to reach the last mile customers for achieving universal access to energy. They feel that the hype around the PAYGO approaches might even endanger the path towards that goal. Others (GOGLA and PEC) rather see the fast development of the PAYGO approaches as a “normal” development of new markets. This path will maybe not only focus on the most vulnerable customers, but offers the possibility to reach many more people than other approaches. According to them, like other young markets, the PAYGO market receives the attention that is needed to grow substantially.
