Executive Summary:

On March 17, 2025, Harmony Energy Income Trust plc (HEIT) and Foresight Group LLP (Foresight) made a joint statement regarding a possible cash offer for HEIT by Foresight.

This development follows our February analysis of Great Britain's listed battery funds, where we examined the evolution of the listed structure for battery storage ownership.

In this report you will find:

• An update on the details of the announcement
• Historic NAV and share pricing data analysis
• The evolution of battery energy storage systems as an infrastructure investment
• Why HEIT's portfolio is valued higher than building new battery systems from scratch
• What this means for the wider sector

Note: This article is for informative purposes and does not constitute financial advice or recommendation.

The terms of the possible cash offer

Under the proposed terms, HEIT shareholders would receive 84p per share in cash, valuing HEIT's ordinary share capital at approximately £190.8 million.
The offer represents a 29% premium to HEIT's closing share price of 65p on March 14, 2025 and a 76% premium to the pre-asset sale announcement price of 48p in May 2024.

The proposed offer represents a 9% discount to HEIT's last reported NAV of 92p per share. This marks a potential recovery from the 68% discount seen before the asset sale announcement. The valuation reflects the long-term value of a fully operational, strategically-positioned battery energy storage system (BESS) portfolio.

The evolution of BESS as an infrastructure investment

BESS has shifted from a high-risk asset to an established infrastructure investment, with deployment growing from 30 MW in 2016 to exceeding 5 GW by 2025.

Previously, battery projects carried uncertainties around installation, operations, and degradation. This attracted higher-risk capital with higher return expectations, often from specialist developers like Harmony Energy. Now, these unknowns have become knowns, which enables large funds to deploy low cost capital into the space.

BESS compliments Foresight's diversified renewable energy portfolio

For renewable energy funds like Foresight, BESS investments can provide more than attractive returns — they act as a strategic hedge. By storing excess energy during oversupply and dispatching it when prices recover, BESS helps stabilize revenue in solar and wind portfolios facing negative pricing risks.

The proposed offer illustrates how capital recycles through the industry

Infrastructure funds like Foresight are positioned to acquire proven assets, enabling developers to reinvest in higher-risk projects. This supports a sustainable ecosystem where developers focus on higher-growth development phases while infrastructure funds accumulate stable, income-generating assets.

The proposed offer presents Foresight a clear, efficient route-to-market

A £784k/MW valuation (based on total enterprise value) reflects a significant premium over the typical £550k/MW CAPEX cost for comparable two-hour battery systems, excluding financing, transaction costs and development expenses.

The valuation reflects more than just the battery cells on-site; it includes the optionality tied to securing long-term site leases (typically up to 40 years). The acquisition would bypass risks tied to grid connection uncertainties, construction delays, and potential disruptions from NESO's ongoing connection reform process.

The valuation demonstrates confidence in BESS revenue forecasts

Based on Modo Energy fixed cost assumptions a £784k/MW 2-hour duration battery portfolio requires revenues of £93k-£106k/MW/year at standard industry discount rates of 8-10%. This aligns with HEIT's actual 2025 year-to-date performance of £103k/MW/year and Modo Energy's real-term long-term forecast for two-hour BESS projects.

Potential impact on listed funds and future ownership models

Private ownership eliminates reliance on NAV-linked public equity raises, giving owners greater financial flexibility and improved access to a wider range of debt, credit and long-term loan facilities. It allows owners to implement longer-term strategies to prioritise expansion, augmentations and operation upgrades, without the pressures of quarterly reporting.

Foresight's interest in HEIT highlights growing investor confidence in BESS. On the day of the announcement, Gresham House Energy Storage Fund (GRID) rose 11%, and Gore Street Energy Storage Fund (GSF) gained 6%. The deal may set a new valuation benchmark for the sector, potentially driving a revaluation of other listed battery funds trading below NAV to explore alternative ownership models.