Vanadium redox flow batteries have shown a lot of promise over the past few years, but have met with little success, but large-scale development in China and the realization of a shortage of battery metals have made this battery It could be the spark the technology needs to take off.
stock head Ask vanadium expert David Gillam, president and CEO of financial consultancy Mastermines, that question, and you’ll see a lithium or Elon Musk-style moment for vanadium redox flow batteries (VRFBs) in the next two years. but there are several reasons. Why is this battery technology not yet popular?
In a nutshell, vanadium redox flow batteries (VRFB) are used in large-scale energy storage systems to store excess electricity from the grid for use during peak demand periods.
Whether combined with solar power, biogas generators, wind power, or parallel operation, the high storage capacity of these batteries allows consumption to be completely shifted to off-peak hours, making electricity cheaper. increase.
As its name suggests, VRFB uses vanadium ions in the electrolyte solution and is believed to be safer, more scalable, and longer lasting than its lithium counterpart with a lifetime of 20+ years.
While other types of batteries such as lithium-ion and leached acid are affected by charge cycles, the VRFB comes with a vanadium electrolyte storage tank that can be refilled even when the system is supplying power.
Gillam said investors have been eyeing vanadium stocks and wondering why it took so long to penetrate the market, but he said the situation was “very complicated.”
“Vanadium is pretty unique as far as battery metals go, and investors don’t really understand the root of the problem.”
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Vanadium cost pushes up VRFB cost
The initial investment in vanadium batteries is considerably more expensive than in lithium, Gillam said, and while the price of lithium is rising, VRFB faces bigger problems.
Vanadium is an expensive metal and significantly increases the cost of VRFB systems compared to other types of batteries.
The dramatic increase in VRFB uptake also drives up the price of vanadium pentoxide (V205), a material used in electrolyte solutions.
“We believe anything under $10 a pound is doable, but let’s say the demand for vanadium batteries is so high. What if the price hits $20?” Gillam asks.
“It’s happened before and it’s happening very quickly.
“Prices of key components are highly volatile, so it is not hard to imagine battery companies worrying about costs as they can add 30% to a battery overnight.
“At the same time, investors and miners may also be concerned about V205 volatility. It’s great when V205 is on the rise, but what happens when a major kicks off and adds 10% more capacity?” he explains.
The International Renewable Energy Agency (IRENA) estimated installation costs for both vanadium redox and bromine-zinc flows in 2016 to range from USD 315 per kWh compared to lithium iron phosphate, which ranges from USD 200 to USD 840 per kWh. It is reported to be in the range of 1680 USD.
IRENA predicts that by 2030, VRFB installation costs will drop from USD 108 to USD 576/kWh.
“While presently exhibiting high upfront costs compared to other technologies, these batteries often exceed 10,000 full cycles and are able to compensate for their high initial cost with very high lifetime energy throughput.” points out IRENA.
“However, their long-term electrolyte stability is key to this longevity and is the focus of an important avenue of research effort.”
mine development
In 2019, China was the world’s largest vanadium producer with a total production of 40,000Mt, Russia with 18,000Mt and South Africa with 8,000Mt, with LSE-listed Bushveld Minerals and Glencore being the major players.
China is also a large spot market, making everything more difficult for ASX vanadium stocks, Gillam said.
“Offtake contracts are not difficult, but raising money from China for mining is another matter that requires considerable effort.
“Investors only want to see new mine development outside of China, but there are a lot of problems.”
About 90% of vanadium production is used to strengthen steel, which is economically vulnerable due to its sensitivity to market demand in developing countries.
As noted by Geoscience Australia, vanadium prices soared from US$5.70 in 2004 to US$16.89 in 2005. This is due to an increase in global steel production that has caused an increase in vanadium consumption and a corresponding depletion of stocks.
Over the years, Australia’s vanadium reserves and resources have fluctuated in response to the volatile nature of the vanadium market, but among the few major competitors in the sector, real Gillam believes the effort is starting to show.
“Investors need to be patient and expect massive uptake to force development of markets outside of China that can attract capital,” he says.
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Competition and Market Outlook
The question of whether vanadium electrolyte-based flow batteries are the main event is more complex.
Currently, China is the leader in the area of vanadium redox flow batteries, a hotbed of activity.
Last month, China’s multinational power integrated electrical equipment company Shanghai Electric held the “Energy Integration, Smart Future” Enterprise Summit. Order vanadium batteries.
In a LinkedIn post, Bushveld Energy CEO Mikhail Nikomarov said Shanghai Electric has also announced the delivery of more than 50 vanadium battery energy storage projects and a cumulative installed capacity of over 50MWh.
#BMN VRFB is starting to take off as expected.
Orders for vanadium batteries are huge at 3 GWh. pic.twitter.com/5DmXzbnWNH
— AimWarrenBuffet (@AimWarrenBuffet) September 28, 2022
But Gillam said we should be wary of barbaric claims by Chinese groups.
“Having said that, there is no doubt that 2022 will see a significant increase in actual projects utilizing vanadium, with many new entrants.
“There is also competition coming from ferrous batteries, and we are watching closely how that plays out,” he says.
“From our conversations, we know that the Chinese are also eyeing it, but they will continue to favor vanadium flow batteries within China in the short to medium term, probably due to a lack of technology.
“This competition is escalating quickly, and just last month construction began on a $70 million plant in Queensland to produce ESS IFB. .”
It’s also quite possible that there won’t be a single winner as demand will increase dramatically.
“We may just need everything we can produce on many fronts. We believe this is not just a market shift, but a new energy revolution that will drive the market for years to come.” adds Gillam.
“The combination of increasing scale and lower manufacturing costs of flow batteries and the high price of lithium will push the market towards flow batteries and iron flow batteries. We all know the cost of electrolytes and how cheap iron ore is.”
Notable ASX Vanadium Strains
One of ASX’s biggest players is AVL, whose subsidiary VSUN Energy is developing renewable energy storage solutions using VRFB technology.
At the end of 2021, AVL has signed an agreement with VSUN Energy for a project utilizing Standalone Power Systems (SPS) based on VRFB energy storage technology at Nova Nickel Operation.
VRFBs are initially issued free of charge with the option of ownership or rental after 12 months.
AVL marketing manager Sam McGahan said it will be Australia’s first standalone power system using vanadium flow batteries.
“There are several vanadium flow batteries installed in various universities in the east. Overall, I think there are about eight vanadium flow batteries in Australia,” she says.
“Having the right solution for the right setup is critical, but the demand for lithium in electric vehicles is so great that the market is starting to look to other materials for stationary storage.
“The world will need massive amounts of energy storage: pumped hydro, ferrous batteries, vanadium, lithium-ion. In our view, there are no winners or losers.”
AVL is also developing an Australian vanadium project at the Murchison Project in WA, and a bankable feasibility study (BFS) announced in April identified the project as a potentially significant global primary producer. was confirmed to be
TMT’s subsidiary, vLYTE, was established to add value to high-quality raw materials from the Murchison Technology Metals Project (MTMP) in Western Australia, right next door to AVL, in downstream processes such as the production of vanadium electrolytes. it was done.
vLYTE is working with global battery manufacturers and renewable energy suppliers in advancing their downstream processing strategies.
TMT recently announced that it will work with the government-backed Future Battery Industries Cooperative Research Center (FBICRC) to improve the performance of vanadium redox flow batteries and use products from the Murchison project as raw materials for vanadium electrolyte research.
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Other major players in this space include TNG (ASX:TNG), Vanadium Resources (ASX:VR8), Critical Minerals Group (ASX:CMG) and Manuka Resources (ASX:MKR).
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