Simulating the effect of the Pay-as-you-go scheme for solar energy diffusion in Colombian off-grid regions

Abstract

Providing affordable and clean energy for all is a global priority, especially for off-grid and low-income regions. New business models, such as Pay-as-you-go (PAYG), has been a strategy for providing sustainable electricity in off-grid regions, especially in African countries. However, there is a need for analysis tools, such that we can test upfront the potential for this scheme varies according to local context. In this paper, we propose the use of system dynamics for energy policy assessment. We set-up the methodology considering the off-grid context, and then we developed a system dynamics model to assess the effect of the PAYG scheme in the diffusion of solar energy in off-grid and low-income regions. The method is tested using a case study, the Colombian case. The application of the methodology depicts simulations that indicate that effect of PAYG is limited under the current market conditions of Colombian off-grid regions, considering that solar companies obtain most of their income directly from Government's subsidy. Better results are obtained when implementing PAYG in a lower subsidy scenario, which indicates the potential to optimize the allocation of subsidies. We finally discuss the importance of the local conditions to use the proposed methodology.