Harmony Energy Income Share Discussion Threads

[nickrl] 23/1/2024 12:11

BESS income stream isn't looking good with ancillary services clearing at ever lower prices means that they need the balancing mechanism and wholesale market to drive revenues. Yes the revised BM dispatch algorithms is certainly boosting the use of batteries but there are a lot BESS assets now competing in that market and the other factor that maybe become a longer term issue is the batteries are being cycled more frequently so could undermine durability over the longer term. Although there are further changes coming that will remove the short term restriction (15mins) on use of BESS that may benefit the longer run duration providers.

As i see it they need 13m for the 8p divi have at least 100m at c8% loan cost so another 8m then Inv Mgr wants their cut c4m although with NAV dropping that may help. So are they generating 25m income out of these assets is hard to value as like GRID they don't give much away on operational performance of each asset. You can look at Modo and get an idea of run rate/MW but unless you know how much energy has been put into the grid you don't know what they are actually earning. The other problem is the trading subsidiaries accounts are always so out of date that they don't help either.

Everything has its price but will sit on fence until the next trading update.

[pottsypotts] 23/1/2024 11:01

Anyone still a holder of these like moi from the IPO, down now to near the year low

[nickrl] 30/11/2023 09:33

Latest NAV update sees the ship steady on NAV. Certainly cant see share price moving back further with their commentary about revenue streams still feeling the pressure on pricing and that even their more lucrative dynamic regulation income likely to be subject to downward pressure from another change of approach by ESO. The upside is the new bidding system for the Balancing Mkt should increase this revenue stream and BESS are in pole position to exploit the spread on electricity prices through the day.

[pottsypotts] 14/11/2023 14:16

Wonder if this is currently helping the share price upwardsSaw it on another boardhTtps://www.current-news.co.uk/battery-wholesale-trading-revenues-reach-highest-level-since-2022-in-october/

[cc2014] 23/10/2023 08:23

It's like they've all been told to buy some or the company as some others do recommend all directors hold a minimum amount and it's just been discovered they don't.

Frankly if not one of them has bought more than £2k it kind of suggests to me they have little confidence in HEIT.

[hugepants] 23/10/2023 08:07

5 directors collectively buy what, 13,000 shares? Not exactly a vote of confidence.

[nickrl] 18/10/2023 20:38

@CDV thats GRID trying to talk their share price back up to a degree as that info is just confirming what the ESO has already said would happen. Also you need the asset in the Balancing Mechanism to be able to participate that said it should certainly improve revenue for all the BESS suppliers but might end up like ancillary services and prices are driven down due the amount of batteries competing in that space. They will need to balance off not over cycling them in pursuit of revenue.

[cruelladeville] 18/10/2023 16:00

I expect arbitrage to be highly profitable this winter. And even more so as wind generation gets ever greater. The wind doesn't care.

[cruelladeville] 18/10/2023 15:59

A bit surprised today at a fall in share price here when GRID has announced pretty encouraging news for the BESS industry in the UK.

[llef] 18/10/2023 11:58

I have a couple of questions on BESS if anyone can help..

What is the efficiency of the batteries being installed today?
For a 49MW/98MWH 2 hour discharge battery - how long does it take to charge, is it 2 hours?

I ask because if I look at today's hourly electric prices below, if I know the above, then I could estimate how many times a battery could be charged and discharged profitably a day, (accepting that today is not an ordinary day, being an unusually windy day).

time price
23 - 00 66,01
00 - 01 34,52
01 - 02 24,18
02 - 03 13,06
03 - 04 1,72
04 - 05 3,92
05 - 06 32,20
06 - 07 83,01
07 - 08 108,14
08 - 09 102,51
09 - 10 90,14
10 - 11 79,87
11 - 12 72,57
12 - 13 65,38
13 - 14 58,96
14 - 15 63,00
15 - 16 67,53
16 - 17 85,00
17 - 18 103,26
18 - 19 113,01
19 - 20 114,99
20 - 21 74,09
21 - 22 59,11
22 - 23 34,20

[cc2014] 18/10/2023 08:49

Many thanks everyone for your thoughts yesterday. I feel more informed.

I checked the electricity price this morning just before 6am and note it had gone negative again to about £-25 due to too much wind being generated, or too little demand if you prefer.

It does seem a bit of a strange turnaround that the battery storage companies are now making money off arbitraging negative energy prices when there's too much wind but I guess it shows just how unbalanced the grid now is.

I am wondering whether any more renewables, whether solar, wind or battery are going to get built with the current cost of capital after those in progress are completed. I wonder the same about construction in general

[nickrl] 17/10/2023 22:34

BESS Analytics website used to provide daily data on the output and income achieved by each battery provider but about month ago they stopped making data available publicly. Prior to that HEITs Pillswood units were up at the top of the leader board outrunning GRID albeit they had more commissioned capacity. This data generally indicated 2hr units were doing the best so having another big unit cant but help the cause.

[cc2014] 17/10/2023 21:11

My prediction is:

Peak at 5.25-5.5%

Drops back to around 4% as the economy just can't take the pain from rates rising so fast

Then it gets stuck there for a while before it starts to rise again.

[spectoacc] 17/10/2023 20:16

@CC2014:

"With interest rates at shall we call it more normal long term levels how many of these projects are now worthwhile."


Read that as "...Now worthless" :))

But did remind me that I saw a chart yesterday - of the "modern era", and dated from 1960 to the present - that said the average interest rate over all that period was 7.25% (I think - might have been 7%).

Very low in the 60's, very high in the 80's, very very low in the noughties/tens. But the average 2% above where we are now.

Observation rather than prediction, albeit +7.8% wages this morning.

[topvest] 17/10/2023 19:35

The prospectus says this:
"The acquisition price in relation to Seed Projects and Advanced Project is calculated in each case from a modelled total fixed funding requirement of £750,000 per MW, supported by the Valuation Opinion Letter. See Part 3 (Seed Portfolio and Exclusivity Pipeline) of this Prospectus for further detail."

[topvest] 17/10/2023 19:24

erstwhile2 - interesting, where did you get this data from?

[cruelladeville] 17/10/2023 18:21

Fully realise it isn't like for like. However, it's worth mentioning that Octopus Renewables (ORIT) announced the sale of two on shore wind farms in Poland last week. The return to ORIT is between 25 to 30% depending on final agreed sale terms. In a thin market with few other examples, it does demonstrate that it might be too easy to undervalue operating renewable energy assets. It seems many planned projects won't happen any time soon. Those that have already happened and are successful might just be worth a premium soon enough. Perhaps.

[cc2014] 17/10/2023 17:32

We return to the ZIRP question. How many of the assets built were only built because interest rates were zero or because fund managers parked money anywhere where they though they could make some income.

With interest rates at shall we call it more normal long term levels how many of these projects are now worthwhile.

I cannot currently find the cost of the £110m + £20m HEIT loan facility but this RNS is for the first £60m and I presume is the same thing as it gives the ability to extend to £130m



The are paying somewhere between 300 and 375bp over SONIA. Let's call that 8.5% at current rates.

Given they are borrowing at 8.5% I wouldn't want them building anything unless there was an assured 13.5%+. Energy markets are volatile so possibly even more.

36% of GAV (against what I see as a questionable NAV) and volatile pricing seems like a level of risk that I'd want to understand properly.

The market is clearly unhappy about something, although to be fair there are now dozens of bashed down IT's with discounts at 30-40% and they can't all be basket cases.

[topvest] 17/10/2023 16:47

I think asset values are probably OK. It's just "fear" in the market and no buyers for any alternative assets. Just sellers, mostly out of "fear" and wealth managers taking money out of the UK still. Cost reporting is also not helping. Battery is probably the worst area to be in at the moment, but wind, solar, PFI etc. are all being hammered. Dividend yields are compelling, but nobody cares - they are just looking at the awful chart!

I'd be surprised if valuations for newly constructed assets are much different from what they have just built them for, particularly as they were built on time. No further UK assets will be built if valuations are going below cost. That applies to all renewables!

[cc2014] 17/10/2023 16:25

It's what it doesn't say. Do they ever talk about the balance sheet?

Shares in issue 227m.
Debt and RCF available £130m


How much of the debt and RCF are they going to use? and what's the marginal profitability on it at current income prices.

If they use all of it that gives a GAV of 36%.

If the NAV isn't really 114.5p which the market clearly doesn't believe based on the share price does the gearing look appropriate?


To me the market seems to be saying to reduce the gearing. HEIT are making no comment.

Harmony (the company not the REIT) make money by building stuff and presumably there is a beast to feed.

[cruelladeville] 17/10/2023 16:01

Thanks. Yes they RNSd it today. I see nothing bad.

[spectoacc] 17/10/2023 15:57

Not a holder but this may be of interest:

[cc2014] 17/10/2023 15:19

Guys I'm really busy today but go take a look at the average price for battery storage.

The GSF update from a few days ago when the Board did it's best to reassure the market that the share price was stupid is a good place to start.

IIRC their UK assets are generating something like 6.6 per MwH. Their Texas assets are doing 150 for the whole month of August.

The last GRID RNS also explained that there's too much battery storage and it will take time to come back into balance as more solar and wind comes on-line.


Happy to discuss in due course. I have a position in GSF so I'm interested in learning more.


Having said all that the prices of TRIG, UKW, SEIT all look odd to me and surely are due a bounce. I have SEIT.


GSF make a disguised statement about their competition and how their margins are better because they do not contract with themselves. Note to HEIT

[cruelladeville] 17/10/2023 15:03

I'm pleased it's not just me who can't understand what's going on with HEIT and to a lesser degree GRID. As far as I can see Harmony is very close to building out a world class portfolio of energy storage assets. We should see some improvement by year end as long as interest rates have peaked as seems the case presently. If yields on cash start to drop buyers should return. I think when they do, they'll be admirably remunerated.