IDTechEx Discusses Future Market Penetration of the Redox Flow Battery - Seite 2

Vanadium electrolyte supply and leasing models

In 2021, 120,000 MT of vanadium was supplied by miners globally, including from key players Glencore, Largo, and Bushveld, with 92% of this going towards steel production and 2% being supplied to the VRFB market. In steel production, vanadium is used as a strengthening agent in rebars, buildings, and other industrial infrastructure. As such, VRFB developers will be competing against steel producers for the supply of vanadium. The limited growth in vanadium supply, and its continuously increasing demand and concentration of supply in China and Russia, will keep the cost of vanadium high in the medium-term. However, junior miners are exploring opportunities to establish new vanadium mines, with focus mostly in Canada and Australia. The successful exploitation of these resources could see greater vanadium supply, potentially lowering its cost and thus facilitating reduced VRFB CapEx and improving its economic case.

VRFB developers could also rent electrolyte from a vanadium supplier over the lifetime of the VRFB. An example sees key VRFB developer, Invinity Energy Systems, forming a company named Vanadium Electrolyte Rental Limited (VERL), with Bushveld Minerals. VERL offers the provision of electrolyte via a rental option to its customers. This helps to reduce the capital cost of a VRFB, making it more competitive with incumbent Li-ion batteries for stationary storage applications. Clearly, however, the customer renting the electrolyte would incur greater costs over the course of the VRFB project's lifetime than if it were to pay the electrolyte supplier with upfront capital. Electrolyte could also be recovered at the end of the VRFB lifetime through ultrafiltration or other more complex re-processing steps. The rented electrolyte could, therefore, be collected by an electrolyte manufacturer and reprocessed to produce vanadium pentoxide. Therefore, renting parties can re-obtain the vast majority of their rented electrolyte, improving the attractiveness of this business model from their perspective.

VRFB player activity

Despite the economic barriers to be overcome to help facilitate the more widespread commercial adoption of the VRFB, signs of continued activity from key players suggest that this technology will continue to be deployed, albeit in lesser volumes than Li-ion batteries for stationary storage applications. IDTechEx estimates that, cumulatively, over 800 MWh of VRFBs have been installed globally up to 2022. This is skewed by a 400 MWh installation made by Chinese RFB player Dalian Rongke Power in 2022. This is a 4-hour duration of the storage system, supporting the connection of new renewable generation sources to the Dalian grid and lowering the peak electricity load in the region. A second phase of the project is expected to bring the project to 200 MW / 800 MWh. Market activity from other VRFB players includes installations made by key players Sumitomo Electric Industries (Sumitomo), Invinity Energy Systems, H2 Inc., and CellCube. Also, in February 2023, Sumitomo announced it will expand its RFB business, making an initial US$7.6 million investment to prepare for local production and installation of RFBs in the US. Such players are looking to continue growing their project pipelines and scale business operations.