South African energy trading company, Etana Energy, aims to secure R9 billion in new renewable energy investments.
This goal will be pursued through a strategic partnership with GuarantCo, part of the Private Infrastructure Development Group (PIDG), and British International Investment (BII), the UK’s development finance institution and impact investor.
GuarantCo and BII will provide $100 million ($50 million each) of default guarantee finance for Etana in South Africa’s largest “energy wheeling framework” transaction.
This innovative type of deal is designed to unlock new renewable energy capacity by providing independent power producers (IPPs) with the revenue certainty they need to break ground on new renewable energy projects.
It is expected that the $100 million in guarantee financing will unlock an estimated R9 billion of new renewable energy projects – providing a major boost to South Africa’s green energy transition – and underlining the UK’s support for the country’s Just Energy Transition Partnership (JETP).
Displacing fossil fuel generation with electricity generated from renewable sources will avoid 1.2 million tonnes of CO2-equivalent emissions annually and create a significant number of new jobs.
This transaction qualifies under the IPG (International Partner Group countries) as part of their JETP commitment to South Africa. JETP is funded by several governments, including the UK, and serves to accelerate South Africa’s environmental transition in the energy sector. This is GuarantCo’s first contribution to this programme.
The guarantee facility will enable around 500MW to be added to the grid by several renewable energy (wind and solar) IPPs over the next few years.
Recent regulatory changes in South Africa have opened up the opportunity for private power producers to sell electricity to business customers.
Companies like Etana are looking to accelerate this opportunity by buying renewable energy from private generators and selling it to a portfolio of commercial customers, "wheeling" the electricity across the existing transmission network.
Etana’s founding shareholders are H1 Holdings, a black-owned investment company with which BII has a longstanding relationship, and Chariot Limited, a British group which is focused on developing transitional energy projects in Africa, listed on the London Stock Exchange.
Evan Rice, CEO at Etana Energy, said: “We need to pursue all avenues that can unlock the capital required to build new electricity generation capacity in South Africa.
"Local businesses need low carbon, cost-competitive electricity to remain relevant and viable. Etana’s aggregation model offers a way to meet these needs whilst enabling new renewable energy capacity to be built."
Comments