- Rachel Kyte, the UK’s Special Representative for Climate, emphasised the UK’s ongoing support for South Africa’s energy transition through the Just Energy Transition Partnership (JETP).
- This is after the USA announced its withdrawel from its JET funding commitment. Read more
- The UK has also announced additional funding to help prepare and ready South Africa’s wholesale electricity market and to explore interim transmission solutions. Additionally, the Private Infrastructure Development Group’s (PIDG) GuarantCo and British International Investment (BII) are offering innovative guarantee facilities to energy trading companies.
During her trip to Cape Town this week Rachel Kyte, UK Special Representative for Climate, announced support to the Energy Council of South Africa to continue engagement and analysis work through NECOM on the critical reform areas of Market liberalisation and Transmission expansion.
The UK welcomes the recent State of the Nation Address (SONA) by President Ramaphosa emphasising the importance of South Africa’s reform agenda as well as the important role of the Energy Action Plan and collective execution through NECOM by all stakeholders.
Wide participation of the private sector in renewable energy can displace coal at a lower cost and at the pace needed to meet business and consumer demand for green energy and energy security. As part of the Just Energy Transition Partnership, the UK is supporting South Africa to speed up the liberalisation of the energy sector, achieve emissions reductions and provide the energy needed to grow South Africa’s economy and provide jobs. Part of the UK’s investment pledge has been to provide Africa GreenCo and Etana with guaranteed facilities for their energy trading. This energy trading is the first step towards a broader wholesale market.
UK Investments supporting Energy Trading Companies
GuarantCo, part of the Private Infrastructure Development Group (PIDG), and British International Investment (BII), the UK’s development finance institution, are together providing groundbreaking guarantee facilities to energy trading companies, which will unlock new renewable power development.
These innovative transactions provide independent power producers (IPPs) with the revenue certainty they need to break ground on new renewable energy projects.
In a first-of-its kind transaction, GuarantCo provided Africa GreenCo with an initial $27 million guarantee facility with the intention to increase this to at least $50m. Africa GreenCo is a regional electricity trader operating across Southern Africa. A significant portion of the GuarantCo guarantee is expected to benefit new renewable energy projects in South Africa. Africa GreenCo is also an active member of the Southern African Power Pool and the first private sector company in South Africa to be issued with an import and export licence by NERSA. This enables it to support the G20 priority of regional interconnectivity and energy pooling.
The innovative and impactful nature of this guarantee facility was recognised on the 5th of March 2025 at the IJ Global Awards ceremony, with the transaction being awarded the prestigious Energy Transition Deal of the Year for Africa for 2024.
Building upon the Africa GreenCo transaction, GuarantCo and BII will provide $100 million ($50 million each) of guarantee finance for Etana in South Africa’s largest “energy wheeling framework” transaction.
It is expected that this 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). The guarantee facility will enable around 500MW to be added to the grid by renewable energy (wind and solar) IPPs over the next few years, displacing fossil fuel generation and so avoiding 1.2 million tonnes of CO2-equivalent emissions annually. It will create a significant number of new jobs.
Energy Trading companies, such as Etana and Africa GreenCo, buy renewable energy from IPPs, aggregate it and sell it on to businesses who need it. They are licensed by NERSA, the regulator, and are relatively new to South Africa. This represents the first step towards a full-scale liberalised energy market, where IPPs compete to sell the cheapest energy at the relevant time of day into the wholesale market. Buyers, including the National Transmission Company of South Africa, then purchase that energy in specific amounts for defined periods.
The scope for more independent power projects to be financed is likely to hit a limit in 2028 while more grid is built over the next few years, including by the Independent Transmission projects that the Ministry of Energy and Electricity is preparing. This study will look at what options there are for other private financing of pieces of critical grid in the interim.
Author: Bryan Groenendaal
