GuarantCo and British International Investment partner to unlock US$500 million of new renewable power for South Africa with landmark $100 million Etana Energy deal

  • Date written
  • December, 2024

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and British International Investment (BII), the UK’s development finance institution and impact investor, expect to unlock US$500 million of new renewable power development through a groundbreaking deal with Etana Energy, the South African energy trading company.

GuarantCo and British International Investment partner to unlock US$500 million of new renewable power for South Africa with landmark $100 million Etana Energy deal

Etana’s founding shareholders, H1 Holdings’ Kenhardt Solar + BESS project in the Northern Cape with Scatec.
https://scatec.com/locations/south-africa/#kenhardt-1-3-south-africa-540-mw

Credit: Courtesy of Scatec, Kenhardt Solar Power Stations.

GuarantCo, part of the Private Infrastructure Development Group (PIDG), and British International Investment (BII), the UK’s development finance institution and impact investor, expect to unlock US$500 million of new renewable power development through a groundbreaking deal with Etana Energy, the South African energy trading company.

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 US$500 million 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).

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.”

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.’’

NOTES TO EDITORS

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 PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency.
PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – InfraCo – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAAIF (the Emerging Africa and Asia Infrastructure Fund), one of the first and most successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.
Since 2002, PIDG has supported 233 infrastructure projects to financial close, which provided an estimated 228 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Global Affairs Canada, Germany, and the IFC. pidg.org

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 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