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Current Demand and Price for Vanadium
Vanadium redox flow batteries (VRFBs) are a front-runner technology for meeting the growing demand in the energy storage sector, says Bushveld Energy CEO Mikhail Nikomarov.
During a webinar on energy storage this week, he noted that data by US-based multiservice professional firm Navigant shows that VRFB demand is expected to increase to over 18 000 MWh by 2027.
However, keeping market researcher BMI Research’s suggested 25% market share in mind, Nikomarov on Tuesday noted that this could increase to over 27 500 MWh by 2027.
If these forecasts hold true, 82 000 t of vanadium will be needed just for VRFBs, he said. Taking the BMI forecast into account, this could increase to over 96 000 t.
“This is a significant demand, and actually presents us with an upside,” he said.
Nikomarov said VRFBs offered clear advantages, both technically and financially, which “sets it apart in large-scale stationary applications”.
Despite vanadium’s limited share in current markets, the demand for vanadium – which offers future opportunities in consumer and mobile energy storage – remains underwritten by the steel market.
Existing demand from the steel and chemicals markets, Nikomarov said, implies a compound annual growth rate (CAGR) for vanadium demand of 2.5% from 2017 to 2027.
The high dependence of VRFB on vanadium may increase this demand CAGR to 8.4%, he added.
Supporting this growth, is the industry’s optimism surrounding VRFBs.
Counting in the battery technology’s favour, he highlighted, was the evolution of energy storage cases that are “actually what a vanadium battery does”, which is longer duration and multiple purposes from one battery; as well a reduction of cost and consolidation.
Nikomarov also pointed out that the technology has Chinese political support, which is leading to greater VRFB deployment in Asia, compared with other regions.
He added that VRFB technology also formed part of China’s new National Development Plan.
Other advantages include an internal rate of return of between 2% and 22%, flexibility in its uses, as well as a movement to long-duration storage.
Compared with lithium-ion batteries, which Nikomarov noted are much stronger for shorter duration applications, VRFB growth will be seen in larger uses, such as utility-scale energy storage over the next decade, especially considering that these have a need for transmission, distribution and generation capacity.
Lithium-ion batteries, on the other hand, are more commonly used in power markets where frequency control is remunerated and monetised.
“It’s important to [keep in mind] that within this kind of framework, it’s not really exclusive. There’s a lot of areas in between where you could use either technology from a technical, commercial or hybrid perspective,” Nikomarov stated.
Additionally, he highlighted that those who require long duration, such as utilities, will comprise about 90% of the market, which is very favourable to the growth and increased use of VRFBs.
Shorter duration storage, which is an established market, is what VRFB has historically been used for, but it is not growing as fast as some of the other sectors, and will not be such a large market, Nikomarov said.
Further, despite initial start-up costs being a bit more expensive, he believes that, in the case of VRFB, which can be used more as a result of a better cyclability, end-users have the potential to get a greater capitalisation.
“It brings the cost of the battery down and it brings it down to something that is below lithium. And in some cases, [this decrease in cost is significant].”
In terms of pricing and costing, Nikomarov referred to data from Navigant, which forecast that cost decreases for lithium-ion are expected to slow, whereas the same degree of slowdown cannot be applied to VRFBs.
“Costs are expected to come down for all technologies owing to scale, completion and lower transactions,” he said, adding that vanadium, which is used in both the cathode and anode of a VRFB, will further reduce the cost of the battery technology.
“In summation, we see an extremely exciting sector in vanadium. If you look at steel, and its current application in allows, there’s a CAGR of about 2.5%. Once we start looking into some of the scenarios on vanadium battery adoption, that number increases,” Nikomarov enthused, adding that, combined, both the vanadium and steel markets can expect to see a growth of over 10% over the next eight years.
Bushveld Minerals CEO Fortune Mojapelo, meanwhile, said the primary vanadium producer has articulated an ambition to grow its production platform to more than 10 000 t/y of vanadium in the medium term, which will principally be driven by its subsidiary Bushveld Vametco.
Of this target, 5 000 t/y will be from Vametco, where the producer is aiming to further increase its production capacity.
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