Forecasting a healthy growth trajectory for VRFBs
The white paper picked up on a couple of major projects that it said was evidence of growing interest in flow batteries internationally.
These were a 800MWh project in China by Rongke Power/UniEnergy that is scheduled to come online this year and a 200MWh project in South Australia which is in development through manufacturer CellCube, while the biggest VRFB installation in the world today is a 15MW/60MWh system brought online in northern Japan by maker Sumitomo Electric a few years ago.
Revenues from VRFB project deployments are expected to be worth about US$850 million this year and projected to rise to US$7.76 billion by 2031.
White Paper
Vanadium Redox Flow Batteries
Identifying Market Opportunities and Enablers
Published 2Q 2022
Commissioned by Vanitec
https://vanitec.org/images/uploads/Guidehouse_Insights-Vanadium_Redox_Flow_Batteries.pdf
Scope of Study
Guidehouse Insights has prepared this white paper, commissioned by Vanitec, to provide an overview of vanadium redox flow batteries (VRFBs) and their market drivers and barriers. It provides an overview of the key elements of VRFB technology and their value in supporting energy storage projects. Two examples selected from a diverse range of projects that are using the capabilities of VRFB solutions to provide grid balancing services and reduce greenhouse gas emissions by utilizing more renewable energy capacity are presented. The market forecasts for global annual installed VRFB energy capacity and revenue presented in this white paper were prepared solely by Guidehouse Insights without input or bias from Vanitec.
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Risk Mitigation and Partnerships
Given the barriers due to the lack of confidence from customers in this new technology, an emerging trend for flow battery vendors is to partner with third-party financiers to offer a form of warranty insurance that protects a customer’s investment in the event the vendor is no longer in business. Flow battery vendors, such as Largo Clean Energy (formerly Vionx Energy), have implemented this type of value-added service product to reduce the perceived risk for its customers. In 2017, Vionx completed an18-month underwriting process with New Energy Risk to obtain a Performance Warranty Insurance policy from the A-rated global insurer XL Catlin. This backstops the company’s 20-year Performance Warranty Program for as many as 15 years, providing for the bankability of Largo Clean Energy’s system.
Other vendors are offering solutions to reduce the risk to customers by shifting a portion of their upfront investment to an annual expense as part of their operations and maintenance (O&M) service and warranty. For example, flow battery vendors CellCube and Invinity offer their customers an optional electrolyte lease program. A flow battery’s electrolyte represents a major cost component; however, when properly maintained, the electrolyte can be fully recycled at the end of a project’s life. CellCube’s offering allows customers to lease the battery’s electrolyte, which reduces the upfront price of a system, ensures the company stays involved in O&M throughout a project’s life, and allows CellCube to repurpose the electrolyte for future projects.
Largo Physical Vanadium (LPV) is using vanadium to back shares of the company purchased by investors in an effort to increase exposure to the metal. Its vanadium supply will then be used to produce electrolyte that can be provided to VRFB systems, essentially “erasing” the cost of vanadium from the total system cost. Because vanadium does not degrade after use in a VRFB, investors can maintain the value of their holdings. LPV also protects these assets with a safekeeping agreement with investors. While still in early stages of development, this financing model could reduce upfront costs by almost half, overcoming significant cost barriers associated with VRFBs.