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.
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.
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.