FRANK SPENCER: Vanadium: a far-reaching solution to energy challenges

The demand for alternative and sustainable energy solutions is growing significantly in SA. It is being driven by the national grid’s inability to provide sufficient electricity to meet demand, as well as a desire for businesses and individuals to adopt cleaner forms of energy supply.

As grids transition to distributed renewable energy sources — notably solar and wind power — to manage the variability of solar and wind resources, battery energy storage systems are required to provide power in the absence of sun or wind.

Lead-acid and lithium batteries are the best-known short duration battery storage technologies. However, long duration storage, as required by the utility, mining, industrial and commercial sectors, can better be met by using a battery based on a different type of mineral.

SA is home to 25% of the world’s vanadium reserves and has long been a source of the mineral that is used extensively in high-strength steel production. This mineral could become essential as part of a transition to a cleaner energy mix, as it can also be used in vanadium redox flow batteries (VRFBs), which are ideal for reliable long duration storage battery systems.

The key component in a VRFB is the vanadium in the electrolyte, which can comprise 40% or more of the total battery electricity storage system (Bess) commercial value. According to the World Bank, by 2050 vanadium demand for energy storage alone will be nearly twice the current market for the mineral. Based on Guidehouse Insights Research’s forecast for VRFBs, by the end of the decade up to 50% of vanadium demand could come from storage.

Energy storage systems offer immense opportunities for greater efficiencies, as illustrated by the examples below:

• Solar photovoltaic produces most power when the sun is at it brightest (around midday). However, time-of-use tariffs are usually low at these times. By installing energy storage coupled with additional solar it is possible to save the excess energy produced at this time for use during peak periods, when electricity tariffs are higher and the sun has gone down.
• Energy storage systems can be used to cover variations in renewable generation and/or load, thereby allowing traditional generation to run at constant high load factors without challenging, rapid changes in demand or low efficiencies. This is true of both utilities with traditional generation such as coal or nuclear, and commercial operations that operate predominantly on diesel generators.
• Long duration storage can also help defer large investments into transmission and distribution infrastructure such as substations, and high-voltage long distance overhead lines. Much like highways, power lines are only “congested” for a few hours each day and thus are underutilised most of the time. Storage can even out the times when electricity is transmitted each day by allowing more efficient use of existing infrastructure.

SA would be missing a major economic development opportunity if it did not promote the development of VRFB technologies locally. It is a sector where progress has been made and much further potential exists for the country to be home to the entire VRFB value chain.

In SA the VRFB value chain can be localised, in order of opportunity, with the mining and processing of vanadium; production of vanadium electrolyte; supply of electrolyte tanks and containers; battery assembly; pumps and piping; electronics, combiner boxes and controls; and manufacturing cell stacks. The first two of these is already well under way in SA. There is no reason the remaining opportunities cannot also be harnessed.

It would come with significant benefits in respect of job creation, reduced imports, large export potential and additional tax revenues for the fiscus, and would provide further support for the government’s 2030 Integrated Resource Plan (IRP). Local electrical, mechanical and civil contractors would also benefit in projects as this market grows.

Interestingly, SA is already a top market for certain types of energy storage. In 2020 the country was ranked the sixth largest residential energy storage market in the world. The top five are far wealthier, developed economies. This is largely short duration battery storage and is explained by the rapid adoption of battery solutions to mitigate against load-shedding. But it strongly suggests great potential for long duration battery storage. The Industrial Development Corporation has recognised this, taking a 45% stake in the Bushveld Electrolyte Company’s vanadium electrolyte manufacturing plant in East London.

However, additional regulatory support is required to accelerate the local manufacturing supply chain and grasp the opportunity in this space. While some policies are positive for local VRFB development, others are detrimental. The Eskom BESS procurement programmes, the Renewable Independent Power Producer Programme and the Risk Mitigation Independent Power Producer Programme could have created markets for local battery technologies including VRFBs, and such procurement in future could be favourable to the development of a VRFB value chain.

However, they incorporate some provisions that will discourage local value chain development. Their tight timelines make it difficult for this nascent industry to develop. The short delivery times benefit countries such as China and South Korea, which have already established supply chains. Allowing bids with higher local content more timing flexibility would allow time for local investment and ramp-up. Allowing 24 to 30 months between bid award and delivery is not unreasonable for high local content projects, and it would allow for ramp-up timing.

In addition, restrictive technical qualifications enable existing technologies and companies to dominate, rather than enabling local companies and entrants to do so through changing qualification criteria. Some dedicated allocations for nonlithium technologies would open up local development opportunities while encouraging more modern technologies. These programmes require minimal local content. Weighting bids according to local content would assist local businesses.

Finally, the existing Integrated Resource Plan (IRP), a policy document on the electrical power sector from the department of mineral resources & energy, could be more prescriptive on energy storage technologies. While the IRP lists specific quantities of solar PV, wind, coal, gas and other generation technologies, it does not do this for energy storage. Just as there are benefits to having a mix of technologies to generate electricity, there are similar benefits to ensuring a mix of technologies to store energy.

Vanadium taps into a new and fast-growing market that will yield fruitful benefits — to the economy, the environment and to the livelihoods of many. This market is going to grow. But it will grow faster and deeper with the right kind of regulatory approaches.

• Spencer is head of deployment at Bushveld Energy, a subsidiary of Bushveld Minerals.