Harmony Energy Income Trust (HEIT) expects to receive offers for battery storage in its UK portfolio by the end of September.
This morning, the investor, launched by battery energy storage system (BESS) developer Harmony Energy, issued an update to its unaudited Net Asset Value (NAV), a portfolio and operational update for the three months ending July 31, 2024.
It also provided an update on the asset sale, which was first announced in May. HEIT had scrapped its first-quarter dividend, saying the fund’s shares were undervalued by the markets. This has led to the decision to appoint asset manager JLL to sell all or part of its portfolio.
HEIT said the sales process is “progressing” and potential bidders have shown “strong” interest. The group claimed that indicative non-binding offers are expected to be received within about a month.
HEIT’s portfolio includes two of the largest BESS projects in Europe, Pillswood and Bumpers, each of an equivalent size of 98MW/196MWh. The portfolio of eight projects totals 395.4 MW of generation and 790 MWh of capacity (all 2-hour assets), of which 79% (312.5 MW/625 MWh) is operational.
HEIT’s NAV fell slightly (-1.4%) to £215.43 million, compared to the £218.53 million reported at the end of April. The most recent NAV was equal to 94.84p per ordinary share, down 1.37p per ordinary share from the previous reported period.
A negative mark-to-market valuation of a HEIT interest rate swap had an impact on the net asset value, although the impact was partly offset by the activation of the group’s 35MW/70MWh Rusholme project in Yorkshire during the period, which is now has been placed on the market.
Revenue from BESS assets on the Great Britain (GB) network has seen a decline over the past year, largely based on market saturation for ancillary services. HEIT’s fellow UK BESS investment funds, Gresham House Energy Storage Fund and Gore Street Capital have both reported challenges for 2024.
Little wind resulted in lower yields in July
At the beginning of this year, Gresham House said there was a “weak income environment” in the UK market and that it would not announce any new projects in 2024.
At the end of last year, market research firm Modo Energy found that the average returns for battery assets were down 67% year-on-year in the market to £51,000/MW/year.
Gore Street cut its dividend for the year ended March 31, 2025, following the announcement of full year financial results in July.
Although Gore Street said its strategy to diversify into international markets including Germany and the US had to some extent shielded the company from the impact of falling revenues, its net asset value per share fell 7.5% year-on-year.
Gresham House said the situation had improved somewhat from the lows at the end of 2023 when it reported full-year results in April, noting that average revenues for its operating BESS projects rose from £39.5k/MW/year in February 2024 to £77.9k/MW/year by mid-April.
In late June, reporting its half-year results to the end of April, HEIT said that “the worst is behind us and better, more profitable times lie ahead,” as it prepared to deploy three more revenue streams. asset generation in action.
However, for the three months ended July 31, HEIT said lower wholesale market spreads meant revenues averaged £45.3k/MW/year, and reduced wind generation on the UK grid in July mainly impacted revenues from BESS throughout the market. .
Low wind was accompanied by low gas and carbon prices, resulting in average monthly wholesale price differences in July being 28% lower than in June, while the lack of opportunities in the wholesale market increased competition for ancillary services, driving up prices in those markets as well decreased.
There were some positives for the future, HEIT said. The Trust welcomed the Labor Government’s focus on renewables, as well as the recent publication of National Grid ESO’s Future Energy Scenarios (FES) 2024 document, which highlighted the need for continued BESS build-out to support the electricity system.
The introduction of the ESO’s new open balancing platformaimed at automating market participation, has contributed to enabling higher collection volumes in the Balancing Mechanism (BM). Spreads on the BM are typically wider than spreads on the wholesale market, and according to HEIT, this has “helped” the impact of declining revenues on the wholesale market.
While low wind production in July meant lower spreads and therefore lower revenues, we are already seeing higher levels of solar and wind energy on the grid in August, which according to HEIT is correlated with a clear improvement in revenues. It estimated that monthly revenues for August across its portfolio averaged £67.2k/MW/year.
