Harmony Energy Income Trust (HEIT), a leading battery energy storage systems (BESS) investment company, has announced its interim results for the six months to April 30, 2024.
While operating turnover increased to £8 million, compared to £2.3 million in the same period last year, the company’s Net Asset Value (NAV) has fallen by £43.59 million since October 2023.
Norman Crighton, Chairman of Harmony Energy Income Trust said: “The company is at a pivotal stage in its development cycle as an Investment Trust. Over the coming months, our final three assets will become fully operational, leading to a substantial increase in revenues, all other things being equal. This factor, together with the encouraging market signals detailed in this interim report, encourages the Board of Directors that the worst is behind us and better, more profitable times lie ahead.”
The publication of this report follows a difficult year for HEIT. In February, the company announced that its BESS revenues for the year ended October 31, 2023 were “significantly lower” than the previous year, due to a “weak revenue environment for BESS assets.” Despite this, statements accompanying the release of HEIT’s full financial results later that month were remarkably optimistic, predicting “attractive returns.”
However, in May the company announced that it had canceled its first quarter dividend and appointed JLL to sell all or part of its BESS portfolio. HEIT said at the time that this was partly to demonstrate that the fund had been undervalued by the markets, stating that it was taking action to “maximize value and demonstrate the continued disconnect from the share price”.
Looking at the financial results released today, HEIT appears optimistic that the cancellation of dividends, as well as the restructuring of debt arrangements with NatWest and Rabobank, will provide the necessary “stability and freedom” for future success. The report notes that the company “retains the necessary resources to complete construction of the remaining three projects under construction, the Rusholme, Wormald Green and Hawthorn Pit projects, which together will have a capacity of 117.9 MW. HEIT added that “once the company’s operating portfolio, and thus our ability to generate additional revenues, will increase by 42% to 395.4 MW.”
However, the commercial operational dates of these BESS projects have recently been pushed back to the third quarter of 2024, due to delays in a distribution network operator’s connection program and delays with the installation contractors.
What are the prospects for the British BESS?
The outlook for the UK BESS market remains mixed, with good and bad news seemingly in equal measure.
High energy prices due to the energy crisis remain a major limiting factor for the UK BESS market. Consumers are forced to use less energy, reducing overall demand, limiting the BESS market. As regards, According to Cornwall Insight, energy prices are unlikely to fall to pre-crisis levels until late this decade.
On a more positive note, Ernst & Young’s latest Renewable Energy Country Attraction Index (RECAI) ranked the UK BESS market as the third best in the world, with the report noting the technology’s potential as a solution to grid management and price volatility. The sector has seen tremendous growth in Britain, with the pipeline of battery projects increasing by two-thirds year-on-year for the second consecutive twelve-month period.
