*Guarantee of payment obligations of private off-taker to independent power producers (IPP)
Through Etana Energy, this transaction provides revenue certainty to power producers, enabling investment in new renewable energy projects while delivering clean electricity to commercial customers through the country’s existing transmission network.
The deal emerged amid South Africa’s severe energy crisis. We were introduced to Etana through the then newly launched Just Energy Transition Partnership (JETP), backed by the UK Government. After 24 months of development, we reached financial close in December 2024.
The South African energy market was undergoing significant reform, a key element of which was licensing private players for energy aggregation and wheeling**. With 500MW of power being aggregated from multiple independent power producers (IPPs), this deal was the largest of its kind at the time, positioning Etana amongst market leaders. However, this was a market which had limited legal precedent and few frameworks to draw upon. Together with partners, we played a pioneering role in building structures and frameworks that have been market-making, thereby maximising the impact of our guarantee.
**An arrangement to buy renewable energy from private generators and then sell that output to a portfolio of commercial customers across the existing transmission network owned by third parties.
The entire framework around IPPs developing and off-taking power to state utilities is well established with boilerplate agreement and clauses. However, private sector off-take was novel. We worked from what was largely a blank slate – building trust and negotiating terms without significant precedent. This required intense problem-solving and prolonged negotiations.
We put in the hard yards with Etana with the hope that this would lay the foundation for replication across the African continent. We’ve already seen multiple enquiries and are exploring opportunities in Southern and Western Africa.
While we engaged with several stakeholders early in the process, there were others where this could have been initiated sooner. This would have helped avoid last-minute problem-solving for the team.
