Harmony Energy Income Share Discussion Threads

[craigso] 29/11/2024 10:38

The possible outcomes are indeed quite assymetrical here.

We either get an agreed bid in the 80s or somebody is able to go hostile in the 70s (having done enough due diligence).

Or if it all truly goes pear-shaped, 50p is not a demanding valuation based on the improving economics of UK BESS.

Upside of 60-70%. Downside of 10-15%.

I really ought to follow up my words with more buying, but I'm already so overweight renewables and BESS that I might just have to take my chances on a successful HEIT sale feeding into better sentiment at GSF.

[craffert] 29/11/2024 09:54

This is a great arbitrage play.. clearly there are a number of "whole portfolio" bidders...and one has to be taken into exclusivity at NAV...for an outcome by end of Jan 25. So c. 60% share price upside for a 2 month wait. But even if the portfolio sale falls over, this is now a development risk free cash machine which will become more valuable as additional wind and solar generation hits the grid. A rare situation on the listed market.

[sleveen] 29/11/2024 09:07

CC2014, just spotted your comment on GRID re value of the GRID assets if the costs of new build assets are so much lower.

Does rather question the asset value of 5 yo batteries vs new build assets.

I've sold and taken a small profit.

[craigso] 29/11/2024 09:01

Reading between the lines... I suspect that...

1. there will be a serious bidder for the whole package
2. the indicative bids are in the 80s, so HEIT wants to manage NAV expectations down a bit

it would be seriously incompetent to publish a NAV at this level, then say that the best bid is 70p for example.

[sleveen] 29/11/2024 08:57

HEIT being screwed by DNOs for network connection??

[cc2014] 29/11/2024 08:43

how does a change if the cost of the grid connection knock 4.14p off the NAV?

That doesn't make any sense to me. That's a significant change which is more than just a bit of extra inflation


I remain on the sidelines. I can't get a feel for the bid process.

[sleveen] 29/11/2024 08:15

Asset sale process going well.

Hold for 85p??

[craigso] 28/11/2024 17:40

GSF seems to be trading on half of HEIT's £ / MW valuation with lower debt. So there's got to be upside there. But I can understand wanting to give BESS a wide berth if you manage to get out of HEIT or GRID unscathed...

If you don't want to do the fund-picking yourself, PMGR gives you a double discount, whilst still giving you the same yield.

[cruelladeville] 26/11/2024 18:04

The more obvious candidates for me look like NESF and ORIT. There's obviously Gore Street's BESS investment trust. I am feeling a bit bruised with BESS though. PINT was looking good but has recovered to about 90p so not as cheap as it was.

[sleveen] 26/11/2024 14:56

Currently have a holding in NESF yielding 12% @70p.

[sleveen] 21/11/2024 09:00

To paraphrase Meatloaf, the UK renewables sector is all charged up with no place to store.

HEIT and a few other ITs have spotted that opportunity.

[cruelladeville] 20/11/2024 21:19

Well done showing some conviction. A really bad example of poor market timing launching HEIT when it happened. Couldn't have been worse. The company was never going to survive as a "too small to be independent" operating company with headwinds as they are. Having bought at IPO, I'll make a loss if we sell out for 75p. But there are opportunities out there to recycle 75p into other bombed out infrastructure companies with a fairly secure dividend, pretty sound finance and a prospect of regaining some capital medium term. Looking forward to seeing what happens next.

[craigso] 20/11/2024 17:24

Bought back in today. Fingers crossed that the first asset sales aren't too far away.

I guesstimated a premium of at least £150k / MW for operational assets, based on the sale of the Rye Common "shovel ready" project last year for around that amount. Add a £600k / MW replacement cost and you get to £750k / MW. That works out to 75p per share I think. NAV is at 94p.

Hopefully any downside - presumably from the Board rejecting underwhelming bids for the company / assets - is limited by reading across good news from GRID about the UK market. Upside could be 50+% in a relatively short time frame. DYOR.

[craigso] 19/11/2024 18:02

I see your point @nickrl. But does the price difference between recharging overnight and recharging at lunchtime (to grab the evening peak as well) really compensate for the investment? Or perhaps it is more about not putting so much strain on the batteries because you'd have far more capacity in place than your grid connection would allow you to use at any one time...

[nickrl] 17/11/2024 09:34

@craigso advantage of longer duration batteries is overnight troughs can run for 4-5hrs often at negative rates when wind generation is high and then that gives you the morning and afternoon peaks to trade into with a far better margin to be captured.

[cruelladeville] 12/11/2024 15:14

Fair comment, thanks. Reality is seldom as bad as the market thinks.

[craigso] 12/11/2024 15:12

I would wait until HEIT has sold itself before deciding whether to recycle the proceeds into GSF. 2-3 months if the RNS is to be believed...

The share price of GSF isn't going anywhere until it starts delivering covered dividends and Trump 2.0 turns out to be not as bad as feared for US renewables.

[cruelladeville] 12/11/2024 11:55

Tempted to sell HEIT and buy GSF now that the share prices are virtually the same.

[craigso] 12/11/2024 11:52

HEIT won't pay a dividend ever again. Assets will be sold and the IT wound down.

The identity of bidders - and how much they pay for the assets - is also GRID's best hope of coming good eventually.


As for duration extension, are the UK's peaks and troughs really long enough to compensate for the extra investment? There certainly wouldn't be much, if any, additional capacity revenue.

[cruelladeville] 11/11/2024 11:37

No sign of dividends here or there though.

[sleveen] 11/11/2024 10:43

GRID have an upbeat trading update today, the improvement in outlook should also apply to HEIT.

[cruelladeville] 11/11/2024 10:20

That's how I'm hoping HEIT are pitching to prospective bidders. As far as I can see, it's the only strong part of their portfolio.

[nickrl] 09/11/2024 18:09

@CDV indeed once you have grid connection link you have the power level secured and short of grid restrictions you can run the connection at power level for as long as you like so improving duration wouldn't be an issue.