Renewable energy servicizing for residential homes in developing countries

Energy access remains a critical challenge in developing countries due to the unreliability of the power grid. This article studies a servicizing framework in which a third-party firm, distinct from the grid provider, installs and operates a solar–battery system for grid-connected households and charges usage-based fees for energy consumption. The participation service fee is set based on current average household electricity costs, which include the use of gasoline generators during outages. This framework enables households to access more reliable energy services without incurring the upfront costs of system installation. We examine the economic viability of this approach through a stylized analytical model that incorporates investment costs, supply–demand variability, and service performance. We analyze the firm’s joint optimization of solar generation and battery storage capacities under two operational policies, selected by the firm, that differ in how energy sources are prioritized to meet demand. For tractability, the analytical model approximates the battery state of charge at the start of each period (day) by its expected value. Our results provide insights for firms seeking to deliver sustainable energy solutions in developing countries and highlight conditions under which the servicizing model is profitable, particularly in regions with high reliance on gasoline generators for backup power. To complement the analytical findings, we conduct a trace-driven simulation using hourly solar irradiation and household demand data from Nigeria. This simulation relaxes the battery state-of-charge approximation used in the analytical model, enhances the robustness of our results in a more realistic setting, and demonstrates the benefits of pooling capacity to efficiently serve multiple households.