Last-Mile PAYGo Energy: Allocating Support Across Fragile Payment Nodes in Developing Economies

Problem definition. Pay-as-you-go (PAYGo) solar providers deliver electricity through recurring mobile-money payments. When a local agent lacks electronic float, willing customers may be unable to pay, interrupting service and weakening repayment. Providers can soften contracts through grace, allowing temporary payment delays, or support payment nodes through interventions such as agent recruitment and float-rebalancing assistance. We study how a provider should choose contractual grace and allocate scarce node-level support across a heterogeneous network, and how targeted social subsidies can affect these decisions. Methodology/results. We develop a continuous-time portfolio model in which payment failures consist of a support-addressable common-shock component and an idiosyncratic customer-side component. We show that optimal support follows a composition-adjusted index that summarizes each node's private value, support-addressable failure, and cost-adjusted support productivity. The index illustrates why volume, raw-failure, or common-shock-share heuristics can misallocate support. In a calibrated baseline, these heuristics forgo 3.54-6.36% of firm value and leave about 11% of intermediate-node accounts exposed to avoidable lockout. The analysis also shows that grace and support can be complements or substitutes: grace preserves disrupted accounts, but can also reduce support's marginal role and dilute effective payoff. Consequently, the support index can be nonmonotone in grace. Finally, incorporating customer access value yields a social support index that reveals a private-viability gap: some nodes excluded under private optimality can warrant planner support. We characterize the optimal targeted subsidies and show how they can close this gap, generating win-win improvements in provider value, customer surplus, and social welfare. Managerial implications. Payment reliability is not merely a collections issue; it is an operational determinant of provider viability and household service access. PAYGo providers should target support using failure composition and support productivity, not only scale or observed fragility. Policymakers should target subsidies to nodes where social access value exceeds private support returns.