Etana Energy signs a landmark R1.8 billion Guarantee Facility deal with GuarantCo and British International Investment to unlock new renewable energy capacity for South Africa
Etana Energy, the South African energy trading company 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.
Perdekraal East Wind Farm. One of H1’s Round 4 Assets, under Mainstream Renewable Power. Credit: Courtesy of Perdekraal East Wind Farm https://perdekraaleastwind.co.za/
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 US$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 , and companies like Etana are 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 (AIM: CHAR).
Iain Macaulay, Director and Head of Project Finance, Africa for BII, said: “BII is 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.”
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. This guarantee facility is a critical piece of the puzzle for a relatively new company like Etana to be a bankable offtaker for IPPs. We are incredibly grateful to GuarantCo and BII for their vision, support and commitment to catalysing this opportunity with us.’’
Surabhi Mathur Visser, Deputy CEO at GuarantCo, said: “We are proud to support the renewables sector in South Africa by entering into this guarantee framework agreement with Etana Energy. From an investment point of view, it provides strong replication opportunities by proving to the market that a guarantee framework can work at scale. GuarantCo continues to seek out potential market transformation transactions like this in lower-income communities to deliver against the UN’s Sustainable Development Goals in alignment with the PIDG 2030 strategy.”
Key contacts
GuarantCo PIDG Alison Hicks Cecilie Sorhus Communications Consultant Head of Communications +44 (0)7385 551 967 +44 (0)7917 302 724 alison.hicks@guarantco.com cecile.sorhus@pidg.org
BII Andrew Murray-Watson Head of Media +44 7515 695232 amurray-watson@bii.co.uk
About British International Investment
British International Investment is the UK’s development finance institution and impact investor. As a trusted investment partner to businesses in Africa, Asia and the Caribbean, BII invests to create productive, sustainable and inclusive economies in our markets. Between 2022-2026, at least 30 per cent of BII’s total new commitments by value will be in climate finance. BII is also a founding member of the 2X Challenge which has raised over $33.6 billion to empower women’s economic development. The company has investments in over 1,580 businesses across 65 countries and total net assets of £8.5 billion. For more information, visit: www.bii.co.uk | watch here. Follow British International Investment on LinkedIn and X.
About GuarantCo
GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. Since 2005, GuarantCo has enabled USD 6.8 billion of total investment and USD 5.7 billion of private sector investment, giving 44.7 million people access to infrastructure and creating around 243,000 jobs. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development
To find out more visit: www.guarantco.com
About Etana Energy
Etana Energy is a majority black-owned licenced electricity trader that supplies electricity generated by renewable energy projects to businesses in South Africa, using the national electricity grid. Etana’s customers benefit from certified low-carbon electricity at tariffs competitive with Eskom or municipal supply, forward price certainty, flexible contracting terms and qualifying B-BEEE expenditure. For more info see www.etana.energy