South African energy trading company, Etana Energy, aims to unlock R9 billion of new renewable energy investment through a groundbreaking 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 $100 million ($50m each) of default guarantee finance for Etana in South Africa’s largest “energy wheeling framework” transaction.
It is expected that the $100m in guarantee financing will unlock an estimated R9bn 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).
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.
Iain Macaulay, director and head of project finance in Africa for BII, yesterday said BII was demonstrating global leadership in unlocking private capital for climate finance.
“The Etana deal is a truly innovative form of financing that I hope will serve as a template for unlocking South Africa’s green energy potential,” Macaulay said.
Evan Rice, CEO at Etana Energy, said they needed 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,” Rice said.
“This guarantee facility is a critical piece of the puzzle for a relatively new company like Etana to be a bankable offtaker for IPPs.”
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.
The recent regulatory changes in South Africa are said to have opened up the opportunity for private power producers to sell electricity to business customers, and companies like Etana are looking to accelerate this opportunity. - Given Majola
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