Harmony Energy Income Share Discussion Threads

[topvest] 17/10/2023 14:39

How can this be the case? The battery storage capacity is at a very low level versus renewables. Isn't it more of a temporary problem at National Grid with their systems and not fully utilising battery storage? This has a relative strength of 2/100. Not sure I have ever seen anything that bad.

It has attractive assets and a 10% yield but there are no buyers because of the share price chart. Even I'm starting to wonder where this is all going to end. Alternative asset investment trusts are now at really compelling valuations. I suspect there will be some corporate action somewhere as its now looking quite attractive for some boards to accept bids at a 10% discount.

This was a good update today. They are not too far off being fully constructed. Operational performance appears much better than Gresham House Energy Storage who have had a lot of slippage and exposed to the smaller batteries.

Anyway, I cannot believe what I am seeing really. There are just no buyers of alternative asset investment trusts even though interest rates have probably peaked. Even the likes of TRIG are back to their IPO price...crazy!

[cc2014] 17/10/2023 10:03

There is too much battery storage in the UK for the amount of renewables, driving down the margins.

The problem is significant.

[downyr] 17/10/2023 09:54

Can someone pls suggest why this has gone down yet again after what I thought was a + RNS

[cruelladeville] 07/10/2023 11:38

Indeed. The deal with BP is highly interesting. But it's easy to read too much into it. Shell seem to be walking away from green energy projects and BP will probably follow them.

[nickrl] 07/10/2023 09:51

@CDV they did they say they were going to diversify the battery optimisation management to more than one company as portfolio expanded. Press release doesn't mention hardware supply so Tesla have that in the bag for current committed sites.

Separately GRIDs fall from grace over last few weeks has them now trading on 37% discount vs 27% here. Still favour HEIT as the 2hr assets are the ones being favoured both for use and price.

[cruelladeville] 26/9/2023 16:06

Fascinating. But I thought HEIT was partnered with Tesla for both hardware and optimisation/trading services?

[the deacon] 26/9/2023 11:26

https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-announces-deal-with-investment-company-harmony-energy-income-trust-for-physical-power-trading-and-optimization.html

[nickrl] 09/9/2023 20:41

They do outsource the construction of the batteries to contractors who know what they are doing and pay a separate company to many and optimise the asset. You could ask what value the fund mgr actually adds!!

[yump] 09/9/2023 19:32

"Shovel ready" sounds a lot better than "We've bought a bit of land".

I know that's simplistic, but get the impression that these fund investment managers et al, are very good at presentations and going through numbers, while in some cases, somewhat suspect at actually running a business.

Is running a business their background ? OK its financial in its outcomes, but its a material business, requiring project management - or rather, very close and experienced managers to manage the people running the project management.

Feels like the insecurity we used to have when trying to manage the project managers who managed the sub-contractors of the sub-contractors.

[lurker5] 05/9/2023 21:35

An NAV based on NPV's is am absurd way to value an investment. Its been used to bamboozle investors as if equivalent to a real 'asset' which can be sold in the market. In reality its equivalent to buyng an annuity - except that in these cases any resale value is airy faiey and flexible depending on discount rates which can change at the whim of a valuer. They are even more absurd if the NAV is boosted (as it is) by taking in income more than ten or so years ahead. No other share is valued at more than 10-15 years equvalent and then only if highly rated. I think this NAV scam ia being rumbled more and more now. So beware.

[cc2014] 04/9/2023 09:52

The question I've got Nick is the sourcing of the projects from what looks like a sister company to me and whether that beast needs to be fed project after project.

It's all a bit too close and comfortable to me.

I could go on but IIRC HEIT have also had to give up on another project which Harmony have sent on its way to Astrato.

Thers's a price for everything though but what we are seeing is forced deleveraging and uneconomic returns at these high interest rates.

[nickrl] 04/9/2023 09:12

Umm so we are unloading a project that was only acquired 8mths ago at an undisclosed price because the economics aren't good to raise capital or equity to build it. They didn't mention that in NAV release last week but i suppose at least they got the acquisition cost back and we have some working capital. This would have been the another big asset that would have driven revenue so have to question how long they can sustain current divi.

[speedsgh] 02/9/2023 05:55

Overvaluation error hits Harmony despite positive energy -

... Numis analyst Colette Ord said HEIT’s NAV had shown a high level of volatility since launch in November 2021.

‘In part [this] reflects the lower level of contracted revenues compared with other infrastructure segments, combined with the relatively early stage of portfolio that is not yet delivering sufficient cash to pay the high dividend target of 8p, a 9% yield,’ she said, adding that it was a key reason for the wide discount.

She said that infrastructure portfolios that offer a high level of contractual income visibility with inflation protection, fully covering dividend targets and resulting in more stable NAV outcomes, would offer better value.

[topvest] 01/9/2023 19:12

Sounds a bit like the NextEnergy Solar mishap. Oh well, only 3p non-cash so not the end of the world, although it won't help sentiment much will it!

There should be some upside from the 2 September commissionings I suppose!

[nickrl] 01/9/2023 09:41

NAV down 2.3 to 114.8 but they have revealed that there has been an error in NAV calculation from Oct 22 which has resulted in a -3p reduction. Umm so much for the expensive inv mgt team doing proper checks!!

Good to see Bumpers and Little Raith are expected to be energised ahead of schedule in September 2023 and as a result they have procured a T-1 Capacity Market contract via the secondary market worth 403k extra income. Wasn't aware you could do that guess operators who aren't able to fulfil obligations buy it in from others? Rusholme ready to go but grid connection delayed till Q1/24- no mention of compensation i guess there isn't any.

Yield very good here now but am wary about these entities lack of visibility on what the actual cash flows are as its all buried in the operational subsidies. OK at lest they are UK entities but the accounts will be at least 18mths old by the time they are put on companies hse webpage. You have 9m on the dividend, interest on the loans (not declared as its with HEIT Holdings Ltd) but 60m was c5.5% and the top up 50m is maybe 7% but they've yet to reveal what it was hedged at but say 6m on loan interest then the inv mgrs are on c2.5m plus admin 1m. So c19m when fully invested and yes we need to wait for commissioning's to be completed before all subsidiaries have income streams. They never tell us how the individual sites are performing, unlike UKW who give you an operational overview, so we have no backcheck against assumptions being made.

Will keep an eye on it for the time being.

[cruelladeville] 24/7/2023 19:16

£750m 1GW BATTERY PROJECT TO BE BUILT AT CARLTON POWER's TRAFFORD LOW CARBON ENERGY PARK IN GREATER MANCHESTER. Carlton Power, the UK independent energy infrastructure development company, has secured planning permission for the world's largest battery energy storage scheme (BESS), a 1GW (1040MW / 2080MWh) project located at the Trafford Low Carbon Energy Park in Greater Manchester.

[cruelladeville] 21/7/2023 18:52

I think that if we have a bad winter with danger of power interruptions, energy storage firms will be printing money. HEIT has a competitive advantage with it's two hour duration batteries. The future looks good to me and the company shares are far too cheap.

[topvest] 21/7/2023 16:39

I've bought some today. My logic is as follows:
- Energy storage assets are in demand.
- Looks a tad over-sold on the infrastructure to gilts rotation.
- I wanted UK assets only. Simpler.
- 8% yield versus 5% in gilts.
- Close to a 20% discount.
- 2 hour storage batteries and TESLA link.
- Debt seems under control.
- Not messing about overseas.
The downside is that it is SFM listed and obviously power prices are declining.
Near term is definitely rocky with lower prices.
However, it is fairly unlikely (in my view) that asset prices in the medium term will fall much below current construction costs. Therefore, returns should be adequate for the earlier built storage assets, otherwise further desperately needed assets won't be built. Long-run returns will only decline once we have too many energy storage assets in the UK and we are a very long way away from that. What do others think?
From this starting point, maybe a 10% annual retun is possible, 10% being my hurdle rate?

[cc2014] 12/7/2023 08:32

As at 30 April 2023, the Company’s unaudited NAV was calculated to have decreased by 6.7% to £265.89 million (117.07 pence per Ordinary Share),
down 8.43 pence per Ordinary Share over the three months from 31 January 2023. The reduction in NAV was primarily driven by lower near-term revenue
assumptions (-11.41 pence per Ordinary Share) based on the latest revenue forecasts published by independent providers. These reductions are partially
offset by (i) strong results in the T-1 Capacity Market where pricing exceeded modelled assumptions (+1.14 pence per Ordinary Share); (ii) the roll forward
effect as other “under construction” projects become closer to revenue generation (+2.53 pence per Ordinary Share); and (iii) reductions in capex for the
Rye Common project along with a reduction in modelled tax payable following a detailed capital allowance analysis (+4.30 pence per share). Further NAV
growth is expected as projects progress from construction and into operations and the Investment Adviser continues to see strong valuations from third
parties for shovel ready BESS projects.


So, the NAV is highly influenced by near term power price assumptions and the discount methodology used on under construction and shovel ready projects. The rest including revenue from the capacity market is noise.

[cruelladeville] 11/7/2023 20:01

Presently in the market place I think their two hour batteries have a real competitive advantage versus the more common 1 hour duration facilities. That is at least until other operators do the same.I'm expecting serious volatility this coming winter with excellent arbitrage opportunities if HEIT can get the facilities up and running. UK isn't going to be able to fall back on the old coal fired plants like we did last year. They're being decommissioned right now.UK grid capacity could be seriously challenged in a cold high pressure weather system that lasts for a couple of weeks. In fact, I would say it's more likey this winter than ever before that we will see generation shortfalls and supply interruptions.But I hope not.

[nickrl] 11/7/2023 19:16

@CDV never clear with this type of operation how much actual cash the various investments are generating rather than using the valuation surplus to support divi payments. That said HEIT certainly come off more than GRID and would now be my favoured choice with the build out of 2hr batteries.

[cruelladeville] 11/7/2023 17:32

8% yield. Looking like a bargain from here?

[cc2014] 11/7/2023 13:57

Share price has now firmly lost 100p and still little support appearing.

It doesn't look compelling to me.

[igoe104] 05/7/2023 10:34

Institutional redemptions, thats why so many stocks are being walked down. Unexperienced investors who get their quarterly statements and panic sell, forcing funds to sell down. Same old story in a bear market...