Corporate-led approaches to affordable energy: the advantages and limitations of pay-as-you-go (PayGo) for cooking with LPG in Dar Es Salaam

Abstract

Pay-as-you-go (PayGo) business models are promoted as win-win solutions for doing good and making profit, to enable affordable access to energy for all through private sector-led energy solutions in developing countries. Inspired by PayGo for solar electricity, PayGo for Liquefied Petroleum Gas (LPG) has been developed to improve the affordability of cooking with gas to replace the use of charcoal. This study investigates how PayGo contributes to affordability of LPG in Dar es Salaam, Tanzania, and how the characteristics of this energy provision enable or constrain affordability. The analysis also compares PayGo LPG with the further developed PayGo solar business models, and builds on the literature on the private sector's role in providing infrastructure in the Global South. Through mixed methods with an emphasis on qualitative interviews, we elaborate on understandings of affordability. We show that affordability, which intuitively is associated with quantitative methods and economic approaches, can be better understood when also investigated through qualitative research. Empirically, we show that PayGo LPG contributes to affordability but is far from affordable for all and faces similar limitations as PayGo solar in making a profitable business and fulfilling investors' high expectations while simultaneously reaching the large number of people who live in poverty. In policy-making on cooking solutions, PayGo LPG may nevertheless contribute as part of an energy mix. The study provides relevant insights for other urban and peri-urban areas in Sub-Saharan Africa with similar challenges and opportunities on energy for cooking.