BVE

An Energy Storage project developer and component manufacturer

Bushveld Energy Limited is an energy storage developer and component manufacturer focusing on the African market. Launched in 2016, Bushveld Energy is focussed on developing and promoting the role of vanadium in the growing global energy storage market through application in VRFBs via two means:

(a) As a developer it develops and secures mandates for large-scale energy storage projects; and

(b) It is bringing the energy storage value chain to South Africa in order to leverage South Africa-mined and beneficiated vanadium.

This includes the development and operation of a vanadium electrolyte production plant to supply to South African and international VRFB projects.

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.

Partnerships

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

Source: Bloomberg. Metal Bulletin, 30 May 2018

The Energy Storage Market Opportunity for Vanadium

The energy storage market has seen aggressive growth in the past few years and can well be considered to be at a tipping point.
While consumer electronics and electric vehicles have attracted more media coverage in the past, stationary applications, particularly in utility scale applications are growing and are expected to claim a significant share of the overall energy storage market, with recent studies showing that:

  • Stationary energy storage demand is growing rapidly and will exceed 300GWh by 2030; and
  • While actual forecasts vary, most point to 20-40GWh of storage deployed annually by 2025.

In 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. VRFB deployments continue to grow globally, led by China. Market intelligence points to two
more ~400MWh sized VRFBs being procured in China in addition to the 800MWh system by Rongke Power and ~400MWh system by Pu Neng, which were announced in 2016 and 2017, respectively.

The opportunity for stationary energy storage applications lies in both grid-connected and off-grid settings. For grids, energy storage’s proposition includes peak shaving, load shifting, transmission loss reductions, integration of renewable energy and frequency regulation. In non-grid settings, energy storage can be deployed in conjunction with local generation to separate from the grid, creating an islanded micro-grid with secure continuous
energy supply.

Source: Bloomberg New Energy Finance (BNEF), Bushveld Minerals analysis, Roskill, TTP Squared

The use of vanadium in energy storage, through VRFBs, has increased over the years and accounted for two per cent of vanadium consumption in 2017. Current forecasts estimate that VRFBs will account for 20 per cent of vanadium consumption by 2030, but with significant upside of as much as 50,000 mtV demand by VRFBs if they capture 25 per cent of the energy storage market within the next 10 years.

In South Africa, demand for energy storage systems continues to rise, evidenced both by greater enquiries for provision of single-acid vanadium electrolyte or direct projects that require energy storage for at least four hours per day. The new government in South Africa and the renewal of investor confidence has brought encouraging signs that suggests a move towards increased regulatory clarity over the treatment of energy storage, the renewable energy programme and the direction of the country’s energy policy as published in the Department of Energy’s Integrated Resource Plan.

In a sign of market maturity, the South Africa Energy Storage Association (SAESA) was created earlier this year with a mission to create a more resilient, accessible, efficient, sustainable, and affordable energy system in Africa by educating stakeholders, advocating for public policies, accelerating energy storage growth, and adding value to the energy storage industry.

VRFBs challenges and opportunities
The growing adoption of VRFBs must overcome two key hurdles to be sustainable: security of supply and stability of vanadium input cost. Bushveld believes that the key to capturing this opportunity 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:

  • Security of supply
    A 1 GWh VRFB system requires approximately 5,000 mtV in electrolyte, more than six per cent of current annual global vanadium consumption. As an example, if VRFBs capture even 25 per cent of the Bloomberg New Energy Finance forecast annual energy storage deployment of nearly 40GWh in 2027 it would indicate a vanadium demand of over 50,000 tonnes for energy storage alone. Accordingly, the ability to guarantee supply of vanadium for VRFBs will be key to the success of these systems.
  • Stability of vanadium costs
    Vanadium makes up between 30 to 40 per cent of the cost of a VRFB system. The adoption of VRFBs thus depends on the relative and absolute vanadium price. Low cost primary producers with significant production capacity are well positioned to address price volatility. While such solutions could guarantee supply at fixed prices for a longer period,
    others include the option of never fully selling the vanadium and rather leasing or renting it out over the life of the VRFB or energy storage project. Moreover, there is significant economic value in the VRFB value chain to justify the downstream integration that would unlock these solutions.

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