Harmony Energy Income’s (HEIT ) attempt to raise £130m has flopped with the Tesla battery fund taking in just £15m in its C-share issue.

Uncertainty over the government’s proposed price cap for renewable energy generators, coupled with the post-Budget turbulence in the gilts market that pushed its ordinary shares to a discount, cancelled out virtually all investor appetite to provide the capital for three construction-ready battery storage projects, admitted the investment trust’s chairman Norman Crighton.

The £233m company, which raised £210m at its flotation last November, will have enough money to buy the rights to develop the sites in Wormald Green in North Yorkshire, Hawthorn Pit in County Durham and Rye Common in Hampshire, while looking at other ways to fund their construction.

An increase in gearing, or borrowing, followed by another share issue when markets stabilise, were the company’s main options, analysts said, although broker Stifel believed it could bring in a strategic partner to build the assets that will store 181.9 MW of energy when connected to the grid from late next year.

‘I would like to thank investors for all their engagement in the process and support for the proposition, whilst recognising that the pressures from the market and economic uncertainty have severely limited their ability to commit capital currently,’ said Crighton.

Paul Mason, managing director of HEIT’s fund manager Harmony Energy Advisors, said: ‘It has been clear from our engagement with investors that there is consensus on the compelling case for acquiring the projects. We look forward to moving ahead with the projects,’ he said.

Stifel analyst Iain Scouller said: ‘We were expecting more to be raised, especially as the smallest asset, Wormald Green, will cost c.£30m to construct, but we think the board has done the right thing in acquiring all three assets now, and provides the benefit to the listed fund, with a view to arranging “alternative sources of financing” as funding of construction is spread over the next 24 months.’

Matthew Read, senior analyst QuotedData, said there was a danger the government’s proposed price cap would discourage investors from the renewables sector and backing the rollout of battery energy storage systems (BESS) necessary to counteract the intermittency of wind and solar energy.

‘The UK desperately needs more of the type of BESS systems that constitute HEIT’s pipeline and, if the current climate stops the market funding these sort of projects, society will lose as a whole.’

HEIT shares were virtually unchanged at 110.6p today above their launch price of 100p. Having plunged in the ‘mini’-Budget selloff, the shares have recovered in October but are still down 7% over one month and have de-rated to a 5% discount below net asset value (NAV), having stood at a 3% premium above NAV before.

Numis analysts commented. ‘Battery storage funds have not been immune from the recent infrastructure sell-off which predominantly reflects the significant move in UK gilts, and subsequent concerns over what this might imply for discount rates and NAVs, and the relative attractiveness of yields from bonds.

‘Storage funds have higher discount rates compared with lower risk infrastructure segments such as Core/PPP [public-private partnerships], but this is justified given the lower level of visibility of cashflows in our view,’ they said.