The 2022 China Vanadium Summit and Vanadium Battery Industry Development Forum hosted by Shanghai Steel Union was held on September 28th. As one of the main topics of the forum, vanadium batteries have recently attracted much attention from the capital market. At the forum, many representatives thought that vanadium battery energy storage was shifting from demonstration project to commercialization.

However, even though the life cycle cost of vanadium battery is lower than that of lithium battery, the initial construction cost is too high, which leads to the weak investment motivation of enterprises. At the same time, under the situation that the vanadium source basically forms a closed loop in the steel industry, the worry that the development of vanadium batteries is limited by vanadium source is also emerging, which may make the vanadium industry one of the strategies.

Vanadium batteries are ready to go.

According to the relevant research report of Everbright Securities, in the first half of 2022, the scale of vanadium battery in the independent energy storage power station under construction has reached 302MW/ 1 104MWh. In September this year alone, CNNC Huineng released 1 GWh for purchasing all-vanadium flow battery systems, and Shanghai Electric even disclosed that its vanadium battery reserves were nearly 3GWh. In terms of scale, the industrialization process of domestic all-vanadium batteries is accelerating.

The full name of vanadium battery is all vanadium redox flow battery, which is a kind of liquid redox renewable battery with metal vanadium ion as active material. Different from lithium batteries, the electrolyte of flow battery is separated from the stack, and its working principle determines that it is one of the safe technical routes of electrochemical energy storage at present.

How it works Image source: Ke Rong Energy Storage official website

Everbright Securities analyst Fang shared in the forum that all-vanadium flow battery has the advantages of high safety, strong expansibility, long cycle life and low life cycle cost, and is a mature commercial flow battery at present. This statement has been recognized by Yan Chuanwei, a researcher at the Institute of Metals, Chinese Academy of Sciences. In a sense, all-vanadium flow battery is equivalent to flow battery.

Yan Chuanwei's statement is not unreasonable. It is reported that all-vanadium flow battery has been running for many years in the world, and its industrialization effect and reliability verification are obviously higher than those of iron-chromium flow battery and zinc-bromine flow battery.

According to the forecast of GuidehouseInsights, by 20031year, the annual installed capacity of global vanadium batteries will reach 32.8 GWh (about 1.6GWh in 2022), and the compound growth rate will be 4 1% from 2022 to 2003.

In the "Twenty-five Key Requirements for Preventing Electric Power Production Accidents (2022 Edition) (Draft for Comment)" issued by the National Energy Administration on June 29th, it is required that medium and large energy storage power stations should not use ternary lithium batteries and sodium-sulfur batteries, which makes vanadium batteries gradually attract the attention of the capital market for its advantages of high safety, long cycle life, low life-cycle cost and completely autonomous and controllable resources.

But at the same time, compared with pumped storage and lithium battery storage, vanadium battery is in the initial stage of commercialization in the field of energy storage. Most of the existing vanadium battery projects are demonstration projects promoted by local governments, and a few are independent construction projects of enterprises.

Fang pointed out that, first, the high initial installation cost is the biggest drawback. At present, the investment cost of vanadium battery project is concentrated at 3.8-6.0 yuan /Wh, which is more than twice the investment cost of lithium battery energy storage power station (about 1.8 yuan /Wh). Second, the rapid growth of vanadium batteries or the rise in vanadium prices; Third, the energy density is low, and the energy conversion efficiency is lower than that of lithium batteries.

To break the game, we still need to reduce costs.

Even lithium batteries, which are in short supply at present, have been cultivated by policies in the early stage of development. Similarly, vanadium batteries cannot be commercialized from demonstration projects without policy support. At present, the main problem of commercialization of vanadium batteries is to reduce costs.

Fang shared that the life cycle cost of vanadium battery is lower than that of lithium battery, but the early construction cost is too high, which leads to the weak investment motivation of enterprises. In the later stage, it may still need to be promoted at the government level to formulate an effective price compensation mechanism and a long-term energy storage industry policy.

The cost reduction is mainly reflected in electrolyte and stack, which accounts for a relatively high cost. According to IRENA, the cost of vanadium battery is mainly divided into three parts: the cost of stack, electrolyte and peripheral equipment. The stack and electrolyte are the main costs, accounting for about 75% in total; Among them, the cost of vanadium electrolyte accounts for about 40%, the cost of stack accounts for about 35% and the cost of other components accounts for about 25%.

Fang's report also pointed out that with the increase of charging and discharging time, the proportion of electrolyte cost in vanadium battery energy storage system increased. In the 4-hour energy storage system, the cost of electrolyte accounts for 50%, and the longer the time, the higher the proportion of electrolyte.

In June 2020, Li Xianfeng and Zhang Huamin from the Energy Storage Technology Research Department of Dalian Institute of Physics and Chemistry successfully developed a new generation of 30KW low-cost all-vanadium flow battery stack. The reactor adopts self-developed weldable porous ion conducting membrane (cost: 100 yuan/square). Compared with the traditional battery assembly technology, the use area of membrane materials is reduced by 30%, and the total cost of the stack is reduced by 40%.

Yan Chuanwei shared the current situation of electrolyte in the forum, and said that the classic process of electrolyte in vanadium batteries, through vanadium-containing raw materials, was made into an intermediate (leaching solution), and then to vanadium products (such as V2O5) to prepare electrolyte products, can now be prepared in batches and is mature and reliable.

The engineering verification of the short process has begun, that is, the electrolyte is prepared directly from the leaching solution. Yan Chuanwei said that the process can reduce the cost by 20%-30%. In fact, the initial investment is still very low (with the progress of stack technology and the reduction of electrolyte cost), so there is no problem in benchmarking with pumped storage in this respect.

The relevant research report of Everbright Securities also pointed out that the cost of vanadium batteries still has a large room for decline, and the subsequent economy will gradually improve. If the delivery cost of vanadium battery energy storage is reduced by 20% (the unit investment cost of four-hour energy storage is reduced from 3.8 yuan /wh to 3 yuan /Wh), the IRR corresponding to four-hour vanadium battery energy storage is 2.9% (the IRR of lithium battery is 2.5%, assuming the cost remains unchanged).

One of the strategies to support vanadium or industry

According to the production and sales scale data of vanadium in Yan Chuanwei's report, in 202 1 year, the global output was 2 1 10,000 tons, and the consumption was 220,000 tons. Among them, China produced 6.5438+0.3 million tons and consumed 6.5438+0.3 million tons. The main sources are vanadium slag (vanadium-titanium magnetite steel metallurgy), raw ore and solid waste. The domestic (current) vanadium market is characterized by 85% vanadium as a by-product of steel and 90% vanadium consumption.

This means that vanadium forms a closed loop in the steel industry itself, and from the production and sales data, it basically reaches the balance between supply and demand. If the development of vanadium battery starts and the development of vanadium source lags behind, not only the price of vanadium will rise abnormally, but even the supply of vanadium may not support the development of vanadium battery.

It is also reminded in the report that if vanadium batteries account for 20% of new energy storage in 2026, the consumption of V2O5 will be about 1 16000 tons and 185000 tons (four-hour energy storage time) respectively under conservative and ideal conditions. In 202 1 year, the output of V2O5 in China is about 13. 1 10,000 tons; If the development of vanadium resources is less than expected, the large-scale application of vanadium batteries will drive the price of vanadium to rise, further raising the cost of electrolyte.

The unexpected explosion of new energy vehicles led to the shortage of lithium supply, and the price of lithium soared nearly 10 times in just two years. A lesson from the past may alert Yan Chuanwei. In its view, the challenge of the industrial chain is that the current vanadium market (supply) is not suitable for the vanadium battery energy storage industry, and it is difficult to effectively support the start and development of the industry, which is the weakest or restricted link of the industrial chain.

In order to meet this challenge, Yan Chuanwei also put forward a strategy to deal with the shortage of vanadium supply and demand. First, build a large market for vanadium resources, develop more vanadium sources (especially stone coal vanadium), build a large market for vanadium resources with wide sources, and solve the supply problem of vanadium market.

Second, developers who own vanadium and vanadium batteries need to properly master vanadium resources (or own or take strategic cooperation to hold shares) to ensure the advanced nature of the industry.

Fortunately, vanadium resources are self-controllable. According to USGS statistics, as of the end of 20021,the global vanadium reserves were 63 million tons, of which more than 24 million tons met the current demand of mining and production, and more than 99% of the global vanadium reserves were concentrated in China, Australia, Russian Federation and South Africa. Among them, China's vanadium reserves are about 9.5 million tons, accounting for 39% of the world's vanadium resources reserves, ranking first in the world.

According to the recent research report of Everbright Securities, the listed companies related to vanadium batteries and vanadium resources are as follows: