MIDAS SHARE TIPS UPDATE: Storage duo work in Harmony

Energy storage is a complex matter. Vanadium current batteries are essential for long-term storage, but short, sharp bursts of energy are also needed and that’s where lithium-ion batteries come into their own.

Harmony Energy Income Trust builds and operates lithium battery storage facilities, capable of storing and discharging electricity for up to two hours.

The company went public in October 2021 at £1 per share, promising to deliver six sites by the end of 2023 and also pay a dividend of 8p. It is on track to realize both ambitions.

The company’s fiscal year ends on October 31 and dividends are paid quarterly. Managers Paul Mason and Max Slade have already paid 4p for the six months to April 30 and will pay a further 4p for the remainder of this fiscal year, payable in the fall and early 2024.

Three storage facilities are already operational, including Pillswood near Hull, the largest battery storage facility in Europe.

Add three more, which will go live this year, and Harmony’s plants will be able to power a million homes for two hours.

The time period is important, as power demand tends to increase between 5 and 7 p.m., when millions of people come home from work, put the kettle on, eat and watch TV.

Harmony has three more projects in the pipeline, due for commissioning next year, bringing total capacity to nearly 500 megawatts, or enough to power more than 1.5 million homes in two hours.

The group’s factories are strategically located in areas where they can be quickly and cost-effectively connected to local networks.

Most batteries are made by Tesla, which has a good reputation despite its headstrong boss, Elon Musk.

The batteries are safer than many competitors and the storage capacity is also longer than most rivals.

Over time, Mason and Slade Harmony Energy are eager to expand by building more factories and increasing the amount of power available to them.

As the company grows, the valuation and share price should increase along with the dividend. This week’s interim results should reflect optimism about the future.

Harmony aims to deliver a 10 percent total shareholder return through a mix of income and share price growth.

This should be achievable, despite the difficult stock market conditions.

Demand for storage is growing, while Mason and Slade benefit from a close relationship with private investment firm Harmony Energy Ltd, which has given them exclusive rights to projects with a combined capacity of one gigawatt.

MIDAS VERDICT: Harmony Energy Income Trust is a well-run company in a fast-growing industry. Midas recommended the shares at the IPO, they’ve since risen 5 per cent to £1.05 and have paid a stream of dividends, with more to come. Existing shareholders must remain with the company. New investors may also find the current price attractive.

Traded on: Main market Ticker: HEIT Contact: harmonyenergy.co.uk or 01423 799109