Jolly Green Portfolio: Week 7 – HEIT

This week £100 goes to newish investment trust Harmony Energy Income (HEIT)  – battery storage (BESS) using Tesla technology to help balance the grid and profit from the service.

Harmony Energy Income Trust – HEIT – is a relatively new investment trust that invests in commercial scale energy storage and renewable energy generation projects, with an initial focus on a diversified portfolio of battery energy storage systems (BESS) in GB – although they may expand abroad in the future.

Site in development

They have 5 projects at the moment which total 238.5 MW / 477 MWh of which 41.5MW / 83MWh is operational and 197 MW / 394 MWh is in construction with more in the pipeline. To put 477 MWh into perspective:

If we come home from work and boil some potatoes and use 0.5 kWh of electricity at peak time (6-8pm) then that additional power can be supplied by HEIT’s batteries. Their systems contain enough power to boil almost a million pots of potatoes! (954,000 kgSpud) So it’s a lot of power. However, the UK needs much, much more energy storage and just like my other investments in GRID, your money is going into building more batteries.

Battery park development

Why Battery Energy Storage Systems (BESS) is important

With energy storage, it’ll soon be possible to balance power generated by low carbon sources like on wind, solar, tidal, nuclear, biomass, biogas and soon natural gas (with CCS – carbon capture and storage). Just as we’ve weaned ourselves off of coal using gas as the swing producer, we can use energy storage to wean ourselves off gas. This is the way things are heading and you can either jump on the bandwagon or watch it leave the station without you.

What HEIT is different?

Harmony focuses on longer duration 2-hour battery storage. This is different from other companies in the BESS market who have shorter batteries (30 minute / 6 minutes capacity). And surprisingly, the average revenue by battery duration has been consistently higher for 2 hour batteries than shorter lengths. For more information see the factsheet.

They use Tesla’s Megapack batteries for their battery parks as well as Tesla as the EPC – I don’t like Elon Musk but Tesla are pretty good at their battery technology. They have first offer on all projects developed by Harmony Energy Limited (the parent group) which stands at almost 800 MW at the moment.

Higher margins for 2 hour batteries

Investment Case

The trust is relatively new and will seek to raise more money for its pipeline of projects. But it is already profitable and the team in Harmony are experienced in what they do. Even better, unlike some businesses you can take a hands-off approach to running the battery parks. So the running costs (barring electricity costs) are low.

The batteries are a standardised package – easily scalable and can be rolled out at speed on their shovel ready sites. This means you avoid the development risks (that are latent with say Ripple).

Their aim is for an 8% dividend (2% in the first year) and total returns of 10-12%. It’s not going to double in value for you but it’ll be a steady performer and help pay your bills.

I bought 100 shares from my £100 + some SSE dividends and they’ll provide an annual dividend of £8 from next year (fingers crossed). That’s enough money to boil 53 kg of potatoes – should be lucky enough to get them for free.

Why Green Investment is Necessary

I’m a passionate believer that our money should work for something and that’s the purpose of this series of blog posts. Stopping Climate Change and Putin requires more than wishful thinking – so why not invest yourself?

I’m investing through Trading212 & also Orca and if you sign-up yourself, we’ll both get a free share worth up to £200. Alternatively if you prefer a sure thing, I’ve been investing with Invest Engine myself recently and find it very good – sign-up and we’ll both get £25 if you invest £100 for a year (that’s a 25% return and a chance to put your money into action). You don’t need to invest in individual shares, you can choose easily from a range of low cost ETF trackers if you prefer.

Thanks, GFF

This post is not meant as financial advice. You and I will benefit from the affiliate links provided. DYOR and good luck. I own shares in HEIT and other companies mentioned but not Ripple Energy.

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