South African energy trading company, Etana Energy, has signed a R1.8 billion guarantee facility deal 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 US$100 million (US$50 million) each of default guarantee finance for Etana in SA’s largest ‘energy wheeling framework’ transaction.
The deal is designed to unlock new renewable energy capacity by providing independent power producers (IPPs) with the revenue certainty to break ground on new renewable energy projects.
It is expected that the US$100 million will unlock an estimated R9 billion of new renewable energy projects, providing a major boost to SA’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 tons of CO2-equivalent emissions annually.
The transaction is GuarantCo’s first contribution to the JETP which is funded by several governments.
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 SA have opened the opportunity for private power producers to sell electricity to business customers with companies like Etana looking to accelerate this opportunity, expanding the addressable market by buying renewable energy from private generators and then selling that output to a portfolio of commercial customers by ‘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.
“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. This guarantee facility is a critical piece of the puzzle for a relatively new company like Etana to be a bankable off taker for IPPs. We are incredibly grateful to GuarantCo and BII for their vision, support and commitment to catalysing this opportunity with us,’’ comments Evan Rice, CEO at Etana Energy.
