Bushveld Energy is an 84% held subsidiary of Bushveld Minerals Limited, established to participate in the large and growing commercially attractive global energy storage market through vanadium-based utility-scale batteries. In 2014 Bushveld Minerals identified the utility-scale energy storage applications of vanadium based redox flow batteries (VRFBs) as presenting a significant commercial proposition as well as potential opportunity to support and diversify the vanadium demand profile.
The energy storage market is fast growing and forecast to reach US$350 billion by 2030. Of this market, the VRFBs are well positioned to take a significant share of the stationary energy storage market, on account of unique features that give them an edge in large-scale, stationary and long-duration energy storage applications.
Key to capturing this market opportunity is overcoming two hurdles in the development of VRFBs – security of supply and stability of vanadium costs:
- Security of supply
A 1GWh VRFB system requires approximately 5,000 metric tons of vanadium-in-electrolyte – more than 6% of current annual global vanadium consumption. With industry experts forecasting as much as 34GWh in energy storage requirements by 2025, a mere 10% market share of this industry for the VRFBs would require more than 15,000MTV, equivalent to approximately 19% of 2016’s total global vanadium production. Accordingly, the ability to guarantee supply of vanadium for VRFBs will be key to the success of these systems. Bushveld can mitigate this risk through its large, high-grade, low-cost resource base and scalable processing capacity.
- Stability of vanadium costs
Vanadium makes up 30%–40% of the cost of a VRFB system. Sustainable adoption of VRFBs thus depends on the relative and absolute vanadium price. Bushveld can insulate VRFBs from price volatility, as it is a low-cost producer with significant production capacity and can guarantee supply at fixed prices for a longer period.
Bushveld believes that the solution to these two hurdles lies in a vertically integrated vanadium business model that provides both upstream and downstream enablers for the success of VRFBs in the global energy storage industry:
- Upstream: Bushveld Energy’s efforts are focused on solving the security of supply and cost of vanadium input into VRFBs through Bushveld’s upstream vanadium mining and processing operations. Given that vanadium makes up between 30% and 40% of the total cost of a VRFB system, and the vanadium supply outlook is constrained, the ability to solve these two risks and secure supply and low cost for the vanadium inputs is critical to the success of the VRFB systems in the global energy storage market.
- Downstream: Bushveld Energy will provide market development capacity to secure megawatt scale opportunities for energy storage, localisation of vanadium input costs through further beneficiation into vanadium electrolyte, VRFB assembly and ultimately VRFB manufacturing in South Africa. This is important as energy markets are highly structured and heavily regulated, requiring a concerted effort targeting multiple stakeholders to build a market opportunity for VRFBs at the scale that provides critical mass for the VRFB industry.
Smart partnerships along the value chain ensure that operating capacity and intellectual property can be developed quickly. Bushveld Minerals has the following existing partnerships:
Uni Energy Technologies – In April 2016, Bushveld Energy signed an MoU with UET, a US-based manufacturer of turn-key, large- and medium-scale energy storage systems for utility, micro-grid, commercial and industrial, and other applications. The core of the UET system is an advanced vanadium redox flow battery, with breakthrough electrolyte, state-of-the-art containerised design, mature large-scale stacks, and optimised power electronics and controls. The MoU with UET provides a platform for collaboration with a credible technology partner that not only has a strong track record in the technology development of VRFBs but is also a commercial manufacturer of quality VRFB systems.
Industrial Development Corporation – In June 2016, Bushveld Energy signed a cooperation agreement with South Africa’s national development finance institution, the Industrial Development Corporation. The partnership is focused on jointly determining the economic viability of vanadium redox flow batteries for use and manufacture in South Africa. As a leading primary vanadium producer and exporter, South Africa serves as the logical base for VRFB manufacturing.
The IDC has committed ZAR14 billion in support of renewable energy projects in the past five years and it has prioritised energy storage as one of the eight most attractive new industries in terms of financial and developmental returns. The IDC also has important stakeholder linkages with the South African government, regulators and utilities and other key players that are necessary to provide a catalytic stimulus for the energy storage industry as they have for the renewable industry to date.
As part of the cooperation agreement signed between Bushveld Energy and the IDC, the parties have completed two important studies in respect of VRFBs: a study for the market potential of VRFBs and vanadium electrolyte, and a techno-economic study of vanadium electrolyte in South Africa.
The company is now focused on the following priorities:
- Continuing development work, with the IDC, towards an electrolyte manufacturing plant in South Africa, including financial modeling, site selection and more detailed engineering work
- Evaluating the potential quality of electrolyte production at Vametco
- Continuing work on a pilot site for a vanadium redox flow battery in South Africa
- Continuing developing the existing backlog of possible projects, with a focus on South Africa