UK Market: A Key Test for the Sale of 395 MW Battery Portfolio

The sale of Harmony Energy Income Trust's battery portfolio could redefine market benchmarks in the UK. Investors are closely watching the sector's ability to attract premiums amid uncertain conditions.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

The ongoing sale of Harmony Energy Income Trust’s (HEIT) 395.4 MW/790.8 MWh portfolio, one of the largest energy storage funds in the UK, is being closely observed by industry stakeholders. The process, managed by advisory firm JLL, has attracted non-binding offers for individual assets and the entire portfolio. HEIT plans to enter exclusivity with a preferred buyer in December and finalize agreements by January 2025.

An Indicator for the Market

The process is considered a key indicator of the maturity of the UK operational battery market. With few comparable transactions recorded to date, analysts believe this sale could set critical valuation benchmarks. London-listed companies such as Gresham House Energy Storage Fund and Gore Street Energy Storage Fund may also be affected.

Cost and Valuation: A Complex Equation

Peel Hunt analysts have raised concerns about the implied valuation of HEIT’s portfolio, estimated at approximately £837,000/MW. This valuation significantly exceeds the construction costs of a similar project, calculated at around £625,000/MW by Modo Energy. The critical question remains: would a buyer be willing to pay this substantial premium in the absence of exceptional financial performance to justify such a gap?

Battery revenues remain below target, and the cost of capital is decreasing as capital expenditures are forecasted to decline further. This places HEIT in a challenging negotiation position, with some experts suggesting that a discount might be more appropriate than a premium in this context.

Revenue Improvement: Encouraging Signs

Despite these challenges, energy storage revenues in the UK have shown signs of recovery in the second half of 2024 after a tough period due to market saturation. Annual revenues for two-hour systems reached between £57,000/MW and £68,000/MW from August to October, compared to lows of £46,000/MW earlier in the year.

This improvement is attributed to windy conditions and rising gas prices, leading to increased market volatility. In October, HEIT recorded average revenues of £70,000/MW/year, supported by record-high price spreads in the electricity market.

Prospects and Challenges

The closure of the UK’s last coal-fired power station in September 2024 led to an oversupply last winter, weighing on battery revenues. However, recent signs of increased volatility in the electricity market suggest a more favorable environment for storage assets. Gresham House plans to triple its annual revenues to £150 million by 2027 while expanding its capacity to 3 GWh.

Experts caution that revenues will remain volatile until structural improvements in the balancing mechanism are implemented by the national energy operator.

SALA Energy commissions its first grid-scale battery storage facility using sodium-sulfur batteries, supported by both public and private financing.
Utility-scale battery storage system costs continue to fall across Asia-Pacific, but the pace of reductions is expected to slow significantly by 2029, according to Wood Mackenzie projections.
StarCharge has secured a 500MWh energy storage order through a strategic agreement with ENERGY INVESTMENT LLC, strengthening its position in rapidly evolving Eastern European markets.
The Vilvoorde site in Belgium now hosts 400 MWh of operational capacity on a total 800 MWh project, marking a key milestone for electricity storage on the continent.
Idemitsu Kosan has commissioned a 15MW/48MWh energy storage facility in Himeji, marking the start of its deployment in grid-scale storage with Japanese public funding.
The Australian government awarded contracts to 20 renewable and storage projects, surpassing the initial 6GW goal under the fourth round of the Capacity Investment Scheme.
The Padua Complex will deliver 400 MW/1.8 GWh capacity with Tesla's support, at a strategic node of the Texas grid, following legislative action to strengthen energy reliability.
Salt River Project will partner with ESS to install a 50 MWh long-duration energy storage system in Pinal County as part of its capacity expansion plan to meet rising demand.
GoldenPeaks Capital and Envision have signed a memorandum of understanding to deploy up to 1 GWh of next-generation battery energy storage systems across several European markets.
Singapore’s Durapower and Turkish industrial firm Kıvanç have signed an agreement to form a joint battery production venture targeting growing North American demand.
Norwegian-based Kyoto has launched a 56 MWh thermal storage system at KALL Ingredients in Hungary, designed to replace natural gas with renewable-based industrial heat.
US-based startup Base Power secures $1bn in Series C funding to boost domestic energy equipment production and expand its distributed storage platform nationwide.
Clean Energy Technologies has signed a letter of intent to lead multiple battery energy storage system projects across New York State, with each site planned for 5 MW of capacity.
The Hagersville Energy Storage Park, led by Boralex and SNGRDC, was awarded for its planned 300 MW capacity, making it Canada’s largest battery storage site.
Nala Renewables strengthens its position in Finland with the acquisition of a battery energy storage portfolio exceeding 250 MW from Swiss developer Fu-Gen AG.
The Japanese group has started construction of a 20MW battery energy storage system in Hokkaido, aiming for commissioning in 2027 with support from PowerX and Kyocera Communication Systems.
Nightpeak Energy has launched commercial operations of Bocanova Power, a 150 MW battery storage facility near Houston, to meet rapidly growing energy demand in Texas.
Neoen has launched construction of its first long-duration battery in Muchea and commissioned the second stage of Collie Battery, bringing its storage capacity in Western Australia to 3,145 MWh.
Ottawa invests CAD22mn ($16.1mn) to support eight technology initiatives aimed at strengthening innovation, local production, and competitiveness in the country's battery supply chain.
Clean Energy Technologies and RPG Energy Group completed the installation of an Organic Rankine Cycle heat recovery system at a major industrial site in Tennessee.

All the latest energy news, all the time

Annual subscription

8.25$/month*

*billed annually at 99$/year for the first year then 149,00$/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2$/month*
then 14.90$ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.