LONDON, UK: Harmony Energy Income Trust plc has completed the acquisition of three ‘shovel-ready’ pipeline projects totalling 181.9 MW / 363.8 MWh, increasing the Company’s portfolio to nine battery energy storage system (“BESS”) projects with a total capacity of c.500MW / 1GWh.

The company has acquired the projects pursuant to the Pipeline Agreement entered into on IPO which granted the Company a right of first refusal of up to 1GW of BESS projects, from Harmony Energy Limited (“HEL”) and Ritchie Bland Energy No. 2 Ltd (together the “Developers”).

The total consideration for the three projects is c. £21.5 million (supported by independent valuation) being satisfied through the net proceeds of the recent C Share Issue in conjunction with the issue of 7 million new C Shares to the Developers.

The three projects, known as Wormald Green, Hawthorn Pit and Rye Common (Phases I and II), are expected to be energized in Q1 2024, Q2 2024 and Q3 2024 respectively, with grid offers secured. As previously announced, Harmony Energy Advisors Limited (the “Investment Adviser”) conducted a tender process for the supply of battery systems for this batch of projects and pursuant to that process, has agreed material terms with the selected supplier of the 2-hour duration battery systems.

Harmony Energy Income Trust has also agreed terms to increase borrowing under its existing loan facility to enable it to draw down on the previously agreed accordion, alongside drawdown of funds pursuant to a new Revolving Credit Facility. The funds available to the Company, through this borrowing and its cash resources, will fund the construction of the Wormald Green and Hawthorn Pit projects as well as the remaining Grid payments for Rye Common, which are essential to maintain that project’s timeline. The combined facility will increase the total debt available to ca. £130 million, subject to final signing. Alternative funding options for the build-out of Rye Common are currently being considered.

The Investment Adviser is currently tendering for revenue optimisation services and expects to appoint a preferred bidder in due course. In addition, the lease options for the projects have been executed and the balance of plant tender is near to completion. In respect of Rye Common, the relevant lease options have been entered into between Harmony RC Limited (the Rye Common special purpose vehicle (“SPV”)) as the Lessee and a wholly owned subsidiary of HEL as the Lessor at market rates. HEL recently agreed to acquire the freehold land associated with this project, in order to remove pre-existing encumbrances, thereby ensuring that the SPV’s lease options could be effected and thus enabling the project.

Both phases of the Rye Common project are held within the SPV and share a single 99MW grid connection. Whilst Rye Common Phase I has full planning consents in place, Phase II is awaiting planning consent which is expected to be received in early 2023 in line with the overall project timetable. Given the single project SPV and single grid connection, acquiring the project now will mean that the Company can make the necessary grid milestone payments to continue to secure the agreed energisation date. In the unexpected event that Phase II planning consent is not granted, a claw-back mechanism has been agreed in respect of part of the consideration, pursuant to the relevant share purchase agreement.