Vanitec VRFB Report: Challenges & Opportunities

A new report from Vanitec (Global Vanadium Producers Association) identifies the opportunities in vanadium redox flow battery (VRFB) technology. The report identifies flow batteries as possessing the following qualities:

  • durability
  • long lifespan
  • low operating costs
  • low environmental impact in manufacturing and recycling.

We will issue our own analysis, comparing VRFBs and Lithium-Ion batteries soon.  For now, let’s look at some of the main points from the Vanitec report.

Market Forecast & Global Deployment

VRFBs have many benefits: energy storage capacity, scalability, ability to cycle frequently and for long durations, nonflammable construction, and recyclable electrolyte. There is great room for growth with a CAGR of 41% across the forecast period.

Asia Pacific, North America, and Western Europe lead the VRFB market in revenue and global energy storage deployments. Asia Pacific leads with a CAGR of 25.7% for revenue and 37.4% for energy capacity. It’s estimated that Asia Pacific will reach 14.5 GWh of annual VRFB energy capacity. North America is expected to reach 5.8 GWh and Western Europe is anticipated to reach 9.3 GWh.

Partnerships & Government Support

The report refers to partnerships based on the opportunities generated from increased demand in VRFBs. Governmental support has developed in China – the Chinese government is helping along several projects in Hubei and Dalian provinces, as there are large vanadium reserves to put to work in a new industry like VRFBs.

A visualization of governmental corporate support in practice.

Several vendors are also investing in the vanadium industry and technology. In August 2020, a consortium including Bushveld Minerals acquired majority shares in CellCube, a VRFB developer, manufacturer, and distributor. Largo Resources (TSX: LGO) (NASDAQ: LGO), a major global vanadium producer has announced its own vertically integrated energy storage company through its subsidiary Largo Clean Resources.

Unique Opportunities

There are new models and opportunities in the vanadium universe.  For example Largo Physical Vanadium (LPV), is using vanadium to back shares purchased by investors to increase their exposure to the metal. In turn, the vanadium will then be used to produce the electrolyte provided to VRFBs, reducing the cost from the total system cost. The vanadium doesn’t degrade after its use in a VRFB and can be reused – thus protecting the value of their holdings. It will be interesting to see how this financial instrument develops, as it could reduce the upfront costs to VRFB production by almost half, which would reduce a major barrier to VFRB adoption.

What are the SWOTs?

As demand for long-duration storage capabilities increases, the VRFB market is poised for growth.  The SWOT Analysis below reveals some of the variables that may affect the outlook for VRFBs:

To Sum it Up

VRFBs come into focus as the globe moves towards renewables and green technology. With its long-duration storage capability VRFBs are critical to ensuring reliable grid operations. VFRBs have a lot of applications including EV charging stations, and backup power for remote communities and load shifting in the industrial sector.

The VRFB industry requires adequate funding and continued project development and increased demand for long-duration storage to grow. If the industry can overcome its market weaknesses (e.g., high capital costs, narrow supply chains etc.), then VRFBs will be able to take a larger share of the global energy storage market.

Largo Inc. is a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.


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