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Is Vertical Integration Good or Bad for Off-Grid Energy Access? Let’s Get Specific

Pay as you go (PAYG) off-grid energy access business models are often vertically integrated, in that they include elements of manufacturing, distribution, consumer financing, payment collection and after- sales service. A topic of some debate within the PAYG sector is whether unbundling these business models, perhaps more accurately described as “disintegration,” is good or bad for the sector. Disintegration, or the outsourcing of aspects of the business model to service providers, provides more opportunities for specialization, which can result in more cost-effective business models. Indeed, some wonder whether companies in nascent energy markets might be better off avoiding vertical integration altogether and moving straight to disintegrated models.

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