Off-grid applications are cleantech's next big market. Nowhere is this more true than in Africa, where the International Energy Agency predicts population growth will outstrip grid expansion to leave 645 million people without power.

It’s predictably tough for companies in this vast market to stick out from the pack. In order to get a sense of how companies can achieve success in this space, I sat down to chat with Mansoor Hamayun, the CEO of U.K.-based BBOXX, on the eve of a Series A investment from Khosla Impact.

BBOXX builds portable solar kits and plug-and-play solar systems between 2 kilowatts and 4 kilowatts for remote applications in developing countries. It also provides low-power appliances that can be used with the system.

As Hamayun describes it, BBOXX is a classic university startup that began as a charity focused on universal electrification. The company realized the difficulties in grid expansion early on. Even if governments linked every household to the grid, payback was tough because load was often too low. That meant grid extension was a non-starter in many regions.

"I don’t see the grid expanding. And even if it did, the reliability issue is huge, said Hamayun. "Remember the first source of demand for companies like ours is on grid consumers who have terrible service."

For Hamayun, that meant the solution was a distributed "grid." But to his surprise, he couldn’t find the products required to build it out. That’s because few working on the problem knew what it meant to provide an on-grid service in an off-grid environment -- they were simply too focused on kilowatt-hours and not service delivery. That meant the field was wide open for creating products and appliances that catered to the realities of the market.

But quality products are only effective if there's demand for them. BBOXX was fortunate to move into the African market right after the Copenhagen climate change conference in 2009. That conference created a group of motivated consumers -- successful African businessmen -- interested in clean energy solutions. They saw off-grid clean energy as a real opportunity, but lacked the ability to make it happen.

BBOXX stepped in to Africa with nothing more than £45,000 scrounged between the three co-founders. Given its cash-starved state, and the demand driven by African partners, the firm was forced to be sales-driven: without cash flow, they couldn’t grow. The company is now pulling in $3 million yearly and is building operations in a new country every six weeks. Currently, BBOXX is in fourteen countries and is introducing its own retail network. Not bad for a few years' work.

But the real innovation, which earned it a $1.8 million Series A round from Khosla Impact, is the pay-as-you-go finance solution enabled by remote battery monitoring.

Sandhya Hegde from Khosla Impact sums up the investment firm's positive impression this way: “Gathering data on customers' energy usage behavior is the only way we can learn how to provide energy as a reliable service. We believe this innovation is central to unlocking the pay-as-you-go business model and making solar energy an accepted, trusted and financeable product in the eyes of the off-grid world.”

This is off-grid cleantech 2.0.

The most important enabler is consumer financing. Off-grid energy providers often need to ask customers to buy lifetime energy needs on day one. That upfront cost is an impossible barrier for many consumers.

BBOXX is responding by moving to a payment plan model supported by an in-house finance company, BBOXX Capital. The fund was capitalized with the help of a soft loan of $300,000 from the Africa Enterprise Challenge that was matched by franchise partners to reach roughly $1 million. The aim is to use this fund to support 200 to 300 payment plan products/month in Kenya and Uganda.

With financing in place, BBOXX has overcome one of the biggest hurdles for off-grid applications. Now it must execute. That means increased service delivery in the form of low-power radios, televisions and other products, which it sells along with solar systems.

"It’s amazing when I see people streaming YouTube on their phones in rural areas. It blows me away," said Hamayun.

In 21st-century Africa, off-grid clean energy providers like BBOXX are the future. But Hamayun is not alone. From M-Kopa to Azuri, the off-grid cleantech space is quickly filling with exciting competition. The winners will be the ones that leverage mobile infrastructure, find pools of financing and figure out how to provide modern energy services without the help a centralized grid.

Tags: developing countries, off-grid solar, pay-as-you-go