The deal involves GuarantCo, part of the Private Infrastructure Development Group (PIDG), and British International Investment, the United Kingdom’s development finance institution and impact investor. Both entities have committed $50 million each to a guarantee facility supporting renewable projects in South Africa.

Evan Rice, Chief Executive Officer of Etana Energy, explained the significance of the agreement: “This is a guarantee facility we’ve put in place with these two DFIs. The electricity market in South Africa is opening up and undergoing a period of liberalisation. It’s creating opportunities for private independent power producers to sell power through the grid to business customers around the country, unlocking new investments and requiring new business models.”

As a licensed energy trader, Etana Energy plays a key role in facilitating access to clean energy for businesses. “We effectively buy all the energy output from wind and solar farms and then sell it to a portfolio of customers. This allows many more business customers to access clean energy compared to directly buying from independent power producers,” Rice added.

The guarantee facility is essential for enabling the financing of renewable energy projects. “In order for a new company like Etana to be a bankable off-taker for these renewable projects, and for banks to lend money to build them, we need to provide guarantees,” Rice said. “These guarantees backstop our obligations to pay for the energy, which in turn allows projects to secure funding and be built.”

Etana Energy works with multiple independent power producers (IPPs) under qualifying criteria established by international DFIs. Once guarantees are issued, the IPPs can obtain long-term debt funding from commercial lenders to construct renewable energy facilities.

--ChannelAfrica--