Mpaya Energy is offering smart ways for Kenyans to manage utilities

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Published: 2022-06-15

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A theory suggests that people will always look for ways to derive the greatest possible pleasure from the things they purchase and the services they receive. In actuality, though, a number of problems could prevent you from enjoying the fundamental utilities that you pay for, such as electricity, water, or gas; however, a Kenyan business intends to assist with this problem.

Mpaya Energy is a startup company based in Kenya that specializes in the provision of utility services. The company employs intelligent gear and data analytics to assist Kenyans in optimizing their use of services such as gas and electricity.

It would be beneficial to gain an understanding of the significance of the Mpaya Energy startup's purpose before delving into the specifics of its business plan. Utilities come at third on the list of things necessary for survival, behind only food and a roof over one's head. When you have everything else under control, then and only then can you start to consider about luxury like vacations.

In spite of this, there is evidence that the overall cost of these services is going up. In the past few years, the cost of electricity has increased for millions of Kenyans, and the price of cooking gas has jumped by a significant 30 percent in the most recent few months.

Kenya has seen an increase in the number of businesses operating in the utilities industry as a direct result of the struggles that are being experienced by African homes.

An invigorating chance

Mpaya EnergyMwai Mworia and Kevin Mutugi. Source: Supplied

In 2018, Mwai Mworia and Kevin Mutugi discovered an opportunity in the energy sector of urban Kenya while working for the technology business Empire Microsystems Limited. This opportunity was in urban Kenya's energy area. That possibility lay in the field of real estate.

"You find these guys have produced something nice," he said. According to Kevin Mutugi, Co-founder and Chief Commercial Officer of Mpaya Energy, "They have a good development, but utility has always been an issue as to why it's still empty, or why it's not taking shape, or why people are not enjoying it as much as they should."

Mworia and Mutugi, who had previously worked in software development and business, respectively, took stock of the situation and then presented the authorities with a proposal after transitioning from those professions. Not long after that, the Mpaya project entered the phase known as the pilot.

If you've ever received an outrageously high bill for your electricity usage, you've probably questioned what went wrong or whether someone accidentally linked your home to a factory.

Mpaya Energy provides a software solution that performs an analysis of your usage, whether it be of water, gas, or electricity, and assists in locating leaks, areas in which you may reduce your usage, and any culprits that may be driving up your power bill. Its sub-metering technology provides building owners, such as landlords of houses and malls, with the ability to monitor the amount of energy that is consumed by each renter in their establishment.

In addition to monitoring a building's power consumption, the company also installs solar panels and utilizes an innovative business model that is to the benefit of building and shopping center proprietors.

"We supplement the renewable energy you already have with what we provide. If I were a tenant in a shopping mall that utilized both the grid and solar energy sources, and if I bought my "electricity tokens" in the morning and used them during the day, I would be using solar energy, which would result in additional money for the landlord.

Mpaya's manner of operations is highly interesting, especially considering that the majority of utility infrastructure in most parts of Africa is still operated manually.

How exactly does Mpaya Energy function?

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Mpaya will either install its smart meters and other hardware in a building or install plugins on the customer's current hardware in order to turn it into smart hardware, depending on the customer's option. Mpaya is a smart meter company. After it has been deployed, the gadget will be able to connect with its software and provide the consumer with helpful analytics.

"If you were going to be dealing with the grid, then we would install our equipment secondary to the primary utility meter. This indicates that we are carrying it out using a sub-metering basis. "In situations where the grid is not engaged, such as with initiatives using a mini-grid, our gadgets become the primary meters for use on those projects," explains Mutugi.

In the case of cooking gas, the company goes one step further by developing a solution that is beneficial not just to customers but also to gas providers.

"The first thing that we do is ensure that the supplier will receive revenue from the utility. Because our hardware operates on a prepaid model, you will be required to make a purchase before using it. Second, we will provide you with an analysis of a use case. For instance, if you need to know how much you've used in a day, it will show you a graph, and you'll be able to analyze its highs and lows as well as compare it to the amount of money earned or any other criteria you have.

According to Mutugi, the platform will not only show you an analysis of your consumption but will also show you how to make improvements.

"Let's say, for example, you know that the reason your electricity cost is so high is because water heating accounts for 30 percent of it. If you install a solar water heating system, your rate will go down by 30 percent. Not only do we tell you what needs to be done, but we also carry it out on your behalf.

The co-founder of Mpaya admits that the company generates almost nothing from the sale of its hardware products, which means that the software solution is the primary driver of revenue for the business. The business model of the startup, which is based on monthly subscriptions, receives a ten percent consumption fee from each of its 7,000 active users each month.

"Mpaya only recently achieved profitability a few months ago. At the moment, we have a monthly recurring revenue of approximately 300,000 Kenyan Shillings, which is equal to $3,000. Our goal is to increase that number by 10 times each and every month for the next 18 months.

If all goes according to plan, Mpaya's yearly revenue might reach $360,000 within the next 18 months; however, there is still a lot of work to be done.

Mpaya is currently competing in a market in which its rivals are mostly focused on a single utility, in contrast to its coverage of all primary utilities. Mutugi argues that covering everything offers the startup an edge, despite the fact that there are arguments in favor of both models.

Keeping an eye on the years to come

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Although the value proposition offered by Mpaya energy might be attractive, not everyone has the financial means to purchase utility meters all at once for $50. The comparatively high expenses could potentially hold down the growth of the firm, however this may be changing in the near future.

"A shopping center owner with one hundred tenants would have a difficult time acquiring utility meters. But if we approached him and offered him the hundred units, and he was able to pay for them over a lengthy period of time ranging from 12 to 18 months, then that would be feasible. That's a business that could work," says Mutugi, alluding to the possibility of a BNPL model in the near future.

He notes that the company is presently looking to work with large corporations in order to offer the lease-to-own model for its hardware service offerings, and he says that this is something that the company is actively pursuing.

The company, which previously had all of its operations concentrated in Kenya, now has two agents scouting Uganda, which is its immediate focus; neighboring Tanzania is also on the horizon as a potential market for the company. According to Mutugi, the company is now concentrating on East Africa, but in the long run, they have their sights set on the West African market.