For legal reasons, I cannot confirm, but as far as we are aware, Porterbrook offered to put batteries in the 350s and give them to ScotRail, as a fudge for the BEMU contract.
Purely speculation, but I would heavily speculate that ScotRail asked them for the reliability data from the 769 conversion project, and a data set was sent. ScotRail then went for a chat with Northern, with some glaring questions from the data set, and asked about their experience with the whole thing. A hypothetical decision was made rather quickly inside TS that the 350 conversation would be wholly unsuitable and unsatisfactory, and that they would not be taking the option further.
ScotRail will categorically not be taking the 350s as battery units. As pure electrics, potentially, however that seems just as unlikely in the short to medium term.