TIDMHEIT
RNS Number : 0314L
Harmony Energy Income Trust PLC
01 September 2023
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT
FOR RELEASE, PUBLICATION, TRANSMISSION, FORWARDING OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE
UNITED STATES OR ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A
VIOLATION OF LOCAL APPLICABLE SECURITIES LAWS OR REGULATIONS.
1 September 2023
Harmony Energy Income Trust plc
(the "Company" or "HEIT")
Portfolio Update and Net Asset Value
Harmony Energy Income Trust plc, which invests in battery energy
storage system ("BESS") assets in Great Britain, announces its Net
Asset Value ("NAV") update, together with a portfolio and
operational update.
Highlights
-- 2 pence per Ordinary Share dividend was paid on 16 June 2023,
meaning the Company has distributed 50% of the 8p target in
relation to the Financial Year 2023
-- 20 MW / 40 MWh Farnham project became fully operational in June 2023
-- The unaudited NAV as at 31 July was GBP260.72 million, or
114.79 pence per Ordinary Share - as further described below
-- Bumpers and Little Raith projects (combined 148.5 MW / 297
MWh) are tracking ahead of schedule and targeting energisation in
September 2023. Early energisation has enabled the Company to
procure a T-1 Capacity Market contract via the secondary market,
creating GBP403,150 of additional revenue over 12 months from
October 2023 (to be factored into NAV in next period). The
Investment Adviser is seeking to procure further contracts
-- The Company has appointed BP as revenue optimiser for the
Wormald Green and Hawthorn Pit projects (combined 82.9 MW / 165.8
MWh)
Portfolio Update
The Company's nine BESS projects have a total capacity of 494.4
MW / 988.8 MWh, of which:
a) 129 MW / 258 MWh (three projects, 26% of portfolio by capacity) are operational;
b) 266.4 MW / 533.8 MWh (five projects, 54%) are under construction; and
c) 99 MW / 198 MWh (one project, 20%) is "shovel ready".
The 20 MW / 40 MWh Farnham project energised in late May and was
fully operational in June, having satisfied relevant market and
capacity tests. Bumpers and Little Raith (combined 148.5 MW / 297
MWh) are tracking ahead of schedule and targeting energisation in
September, more than doubling the operational capacity of the
portfolio. The Rusholme project (35 MW / 70 MWh) has achieved
"cold-commissioning" (i.e. the BESS is fully installed) but the
distribution network operator is experiencing delays with its grid
connection works and the latest estimates are that energisation
will be delayed until Q1 2024. The Company's other projects are
progressing, with the Investment Advisor's own project management
teams on site overseeing construction and are summarised in the
table below
Project MW / MWh Location Target Commercial Status
Operations Date
(1)
Pillswood 98 / 196 Yorkshire Operational Operational
----------- ------------- ----------------- ------------------
Broadditch 11 / 22 Kent Operational Operational
----------- ------------- ----------------- ------------------
Farnham 20 / 40 Surrey Operational Operational
----------- ------------- ----------------- ------------------
Bumpers 99 / 198 Bucks. Q3 2023 Under Construction
----------- ------------- ----------------- ------------------
Little Raith 49.5 / 99 Fife Q3 2023 Under Construction
----------- ------------- ----------------- ------------------
Rusholme 35 / 70 Yorkshire Q1 2024 Cold Commissioned
----------- ------------- ----------------- ------------------
Wormald Green 33 / 66 Yorkshire Q1 2024 Under Construction
----------- ------------- ----------------- ------------------
Hawthorn Pit 49.9 / 99.8 County Durham Q2 2024 Under Construction
----------- ------------- ----------------- ------------------
Rye Common 99 / 198 Surrey Q3 2024 Shovel Ready
----------- ------------- ----------------- ------------------
Total 494.4 /
988.8
-----------
(1) Dates are based on calendar year
The Company's portfolio continues to perform well relative to
peers. As at the date of publication of this announcement, the
Company ranks as #1(2) year-to-date amongst owners of GB BESS
portfolios (min 50MW threshold), with Pillswood (Phase 1) also
ranking #1 year-to-date at the project level.
In line with the Company's continuing ambition to diversify its
supplier base, and having completed a full tender process, the
Company has appointed BP to provide revenue optimisation services
for the Wormald Green and Hawthorn Pit projects. These services
will commence upon the commercial operation date of the respective
projects.
(2) source: bessanalytics.com. Please note that use of, and
reference to, this website is subject to disclaimers set out
therein. Rankings do not include non-balancing mechanism units and
do not factor in capacity market revenues .
Market Commentary
Average GB BESS revenues trended up over the quarter, with
2-hour duration batteries continuing to outperform shorter-duration
batteries. July was a particularly interesting month: high levels
of wind and solar generation coincided with low levels of energy
demand over two separate weekends, causing wholesale market prices
to turn negative on three occasions and hit record-level low
prices. Negative wholesale prices provide an opportunity for BESS
to be paid to charge, increasing demand on the network. This not
only helps National Grid to keep the national supply/demand balance
stable in real-time, but also means that some of the surplus
renewable energy can be stored and then sold back onto the grid
later when national demand is higher. Average spreads in the
wholesale markets were 20% higher in July versus June, and 2-hour
duration BESS are able to trade twice as much volume as a 1-hour
duration BESS during these high-pricing periods (source: Modo
Energy). The Investment Adviser expects average revenues to
increase during winter in line with seasonal trends.
NAV Update 31 July 2023
As at 31 July 2023, the Company's unaudited NAV was calculated
to be GBP260.72 million (114.79 pence per Ordinary Share). This
represents a decrease of 2.28 pence per Ordinary Share (-1.95%)
compared to 30 April 2023. Part of this decrease (3.0p) was due to
a correction in valuation methodology detailed below. Adjusting for
this correction, NAV increased in the period by 0.76 pence per
Ordinary Share (0.67%) driven by the energization of Farnham and
the roll forward effect due to the approaching energization of
Bumpers and Little Raith as well as continuing construction
progress on the other projects (3.3p). Other factors impacting the
NAV included the revision to the energization date for the Rusholme
project (-0.7p) and the payment of the quarterly dividend (-2.0p).
Revenue assumptions and discount rates remain unchanged.
The early energisation of Little Raith and Bumpers provides
opportunity for the Company to procure T-1 Capacity Market
contracts from the secondary market. One contract already procured
will deliver an aggregate GBP403,150 of additional revenue over the
12-month period from October 2023. This has not been reflected in
the 31 July NAV and will be included in the next NAV. The
Investment Adviser continues to negotiate procurement of further
T-1 contracts.
During the preparation of the 31 July NAV, the Investment
Adviser discovered an error in the NAV methodology for valuing
short term cash flows, as reviewed by the Company's Independent
Valuer, which was introduced at the 31 October 2022 financial year
end. It has been ascertained that this resulted in an overstatement
of the NAV at 31 October 2022 of 2.2p per Share with a 3p per Share
overstatement following through all the subsequently reported NAVs.
A one-off 3p correction applied to the unaudited 31 July 2023 NAV
now eliminates this error. This has no impact on the cash flow
generated by the Company's operations nor its dividend outlook.
In light of this error, the Company is working closely with its
Investment Adviser, Independent Valuer, Auditor and other external
parties to further improve systems and controls at all levels .
The Company's factsheet for 31 July 2023 is available on the
Company's website at:
https://www.heitp.co.uk/investors/results-reports-and-presentations/
Norman Crighton, Chair of Harmony Energy Income Trust plc,
said:
"Operationally, HEIT continues to make strong progress
delivering a diversified and scalable portfolio of BESS projects
across GB with Bumpers and Little Raith (more than doubling the
Company's existing operating capacity) targeting energisation in
September 2023 in advance of winter. This is a significant
achievement and testament to the strength of our delivery team and
strategy.
"The Board is disappointed that there has been an error in the
NAV valuation methodology previously, for which it apologises, and
would like to reassure shareholders that the Investment Adviser and
the Board have taken swift action to understand and address the
error and will further strengthen relevant systems and controls.
There is no change to the cash flow generated by the Company's
operations.
We are excited about the next two projects coming online shortly
which will change the shape of the portfolio considerably."
For further information, please contact:
Harmony Energy Advisors Limited
Paul Mason
Max Slade
Peter Kavanagh
James Ritchie
info@harmonyenergy.co.uk
Berenberg
Gillian Martin
Ben Wright
Dan Gee-Summons +44 (0)20 3207 7800
Stifel Nicolaus Europe Limited
Mark Young
Edward Gibson-Watt
Rajpal Padam
Madison Kominski +44 (0)20 7710 7600
Camarco
Eddie Livingstone-Learmonth
Andrew Turner +44 (0)20 3757 4980
JTC (UK) Limited
Uloma Adighibe
Harmony.CoSec@jtcgroup.com +44 (0)20 3832 3877
LEI: 254900O3XI3CJNTKR453
About Harmony Energy Advisors Limited (the "Investment
Adviser")
The Investment Adviser is a wholly owned subsidiary of Harmony
Energy Limited.
The management team of the Investment Adviser have been
exclusively focussed on the energy storage sector (across multiple
projects) in Great Britain for over six years, both from the point
of view of asset owner/developer and in a third-party advisory
capacity. The Investment Adviser is an appointed representative of
Laven Advisors LLP, which is authorised and regulated by the
Financial Conduct Authority.
Important Information
This announcement does not constitute an offer to sell or the
solicitation of an offer to acquire or subscribe for shares in the
Company in any jurisdiction. This distribution of this announcement
outside the UK may be restricted by law. No action has been taken
by the Company that would permit possession of this announcement in
any jurisdiction outside the UK where action for that purpose is
required. Persons outside the UK who come into possession of this
announcement should inform themselves about the distribution of
this announcement in their particular jurisdiction.
This announcement contains (or may contain) certain
forward-looking statements with respect to certain of the Company's
plans and/or the plans of one or more of its investee companies and
their respective current goals and expectations relating to their
respective future financial condition and performance and which
involve a number of risks and uncertainties. The Company's target
returns are a target only and there is no guarantee that these will
be achieved. This Company cautions readers that no forward-looking
statement is a guarantee of future performance and that actual
results could differ materially from those contained in the
forward-looking statements.
It should also be noted that any future NAV per Share announced
by the Company in due course will, in addition to the matters
described in this announcement, also be affected by valuation
movements in the Company's portfolio and other factors including,
without limitation, purchase prices of battery energy storage
systems and components, project development and construction costs,
income and pricing from contracts with National Grid ESO and other
counterparties, the potential for trading profitability in the
wholesale electricity markets and/or Balancing Mechanism,
performance of the Company's investments, and the availability of
projects which meet the
Company's minimum return parameters in accordance with the Company's investment policy .
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END
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