In 2016, Bushveld Minerals established Bushveld Energy, an 84 per cent-owned energy subsidiary, Bushveld Energy Limited (Bushveld Energy), with the objective of driving greater adoption of VRFBs in the global energy storage market.
This was based on the view that the success of VRFBs in capturing a significant share of the energy storage market rests on solving for two critical factors:
- security of supply; and
- vanadium price volatility – factors that low- cost primary producers are best placed to address.
With these two factors addressed, the global opportunity for VRFBs is significant. Bushveld Minerals recognised the proposition of VRFBs for Bushveld as two-fold:
- It provides scope for growing and diversifying the demand profile of vanadium; and
- It presents attractive commercial value for Bushveld along the VRFB value chain.
Bushveld Energy’s operations are located in South Africa, while its investment in the Vanadium Redox Flow (VRFB) Original Equipment Manufacturer (OEM) CellCube is located in Vienna, Austria.
The Bushveld Electrolyte Company (BELCO) 8 million litre electrolyte/200 MWh production plant under construction is located in East London, South Africa.
Bushveld Energy holds an indirect 25.25% interest in CellCube, formerly known as Enerox. The site for the construction of the 3.5 MW solar PV and 1 MW/4 MWh VRFB mini-grid project for Vametco is located at Vametco in Brits, South Africa.
Bushveld Energy’s business model focuses on five types of revenue-generating activities in the mid- and downstream segments of the vanadium value chain. These activities have comparatively low capital requirements compared with the mining business. These five activities broadly are:
1. Electrolyte manufacturing, which includes: – designing a conversion process for vanadium feedstock from Vametco’s existing mining and processing operations; – building and operating a chemicals plant to purify vanadium feedstock and mix it into a liquid vanadium electrolyte product; and – marketing the electrolyte to VRFB companies or direct users/buyers of VRFB systems;
2. Renting (or leasing) vanadium electrolyte, a new product under development. Whereas historically VRFBs have been purchased with the vanadium electrolyte, rental/ leasing would allow Bushveld Energy, or a special purpose company, to retain ownership of electrolyte and rent it to the VRFB users or buyers. VRFB technology is unique because of the non-degradation of the electrolyte chemistry and the relative ease of extracting vanadium from the electrolyte at the end of the VRFB’s operating life. In addition to smoothing vanadium price peaks, electrolyte rental permits a long-term pricing model that reduces the upfront capital cost of a VRFB to make it one of the most commercially competitive energy storage technologies available;
3. Assembly of VRFBs through an investment in the construction of an assembly plant for a VRFB product. Unlike other battery technologies, VRFB assembly does not require the same production scale to achieve competitive economics. This makes regional assembly of domestic and imported sub-components extremely attractive to reduce manufacturing costs and supply times. Such an activity may involve direct investment into a VRFB company or companies that would own the facility, as well as the technology;
4. Direct selling of VRFBs in African markets as a value-adding local distributor. In addition to identifying opportunities suitable for VRFB energy storage, this activity includes developing local logistics chains covering importation, transport, installation and maintenance of the VRFBs and key components. As electricity markets are heavily regulated, significant activity in this business would require engagement with public and private stakeholders to create an environment that identifies and values the full range of benefits in long-duration energy storage offered by VRFB technology; and
5. Developing and investing in African energy storage projects, an activity that starts with identifying suitable sites and extends to defining the economic business case for VRFB installations. It includes designing the technical and commercial structure of projects that use VRFBs and making direct equity investment into such projects. By creating bankable energy storage projects, either standalone or combined with generation sources such as solar and wind, Bushveld Energy can accelerate the transition to clean energy in Africa while increasing access to quality electricity delivery through distributed mini-grids.
Implementation of these five activities will continue to follow the principles of strategic relationships. Relevant external parties include development agencies, funders, renewable energy developers and energy storage component providers.
Partnering with Vanadium Redox Flow Batteries companies
By partnering with VRFB Original Equipment Manufacturers (OEM) Bushveld Energy intends to play a catalytic role in mobilising third-party capital to assist VRFB manufacturers to scale-up their sales and capacity to meet the fast- growing demand for long duration energy storage solutions. The catalytic role is tied to the unique position of a low-cost primary producer to address risks associated with security of supply of vanadium and the vanadium price volatility.
In line with this strategy, Bushveld Energy made two significant strategic equity investments in Invinity Energy Systems Plc (Invinity) and CellCube (previously referred to as Enerox GmbH) a grid scale and micro-grid energy storage battery manufacturer, headquartered in Austria. As importantly, Bushveld leveraged its investment to mobilise more third-party capital into these companies.
During the period under review, Bushveld exited its shareholding in Invinity. The successful listing of the company, its growth in sales and delivered projects and the additional capital it was able to raise after Bushveld’s initial US$5 million investment, entrenched Invinity as a significant player in stationary energy storage. It also proved the success of Bushveld’s strategy by achieving all the objectives of our investment. This included the ability to exit at US$7.7 million profit for our shareholders.
CellCube is a grid scale and micro-grid energy storage battery manufacturer, headquartered in Austria.