Author: Conrad
Nichols, Senior Technology Analyst at IDTechEx
BOSTON, April 25, 2024 /PRNewswire/ -- The evolution of
the redox flow battery over several decades has seen various
chemistries being developed, commercialized, or even abandoned due
to factors such as poor electrochemical reversibility and
cross-contamination of active species. The vanadium redox flow
battery (VRFB) has prevailed as the most widely deployed and
commercialized RFB chemistry over the last decade; despite this,
the volume of their installations for stationary energy storage
applications is still minimal compared to the incumbent Li-ion
battery, with economic barriers inhibiting their market growth.
However, as suggested in IDTechEx's market report, 'Redox Flow
Batteries Market 2024-2034: Forecasts, Technologies, Markets', a
combination of factors including developments in vanadium markets,
development of cheaper RFB chemistries, and future demand for
long duration energy storage (LDES) technologies, could see
increasing penetration of the redox flow battery in the stationary
energy storage market over the coming years. These developments
will aid in RFB market growth and IDTechEx forecasts that by 2034,
this market will be valued at US$2.8B.
Economic barriers for VRFBs
VRFBs have suffered from high upfront costs due to the vanadium
electrolyte and membranes employed. Vanadium electrolyte accounts
for 30-50% of the unit cost of a VRFB, and is influenced by overall
system size, as well as duration of storage required. The membrane
typically adopted in VRFBs are expensive cationic ion exchange
membranes, such as NafionTM offered by The Chemours
Company. Significant decreases in the cost of membranes are
unlikely, given that cheaper versions could impact VRFB
performance. This could include reduced ionic exchange capacity or
ionic conductivity, higher permeation of active species, or reduced
chemical resistance to aggressive species. However, upfront
electrolyte cost reductions could be facilitated by the
exploitation of new vanadium mines, thus increasing electrolyte
supply or the adoption of vanadium electrolyte leasing models.
Vanadium electrolyte supply and leasing models
In 2021, 120,000 MT of vanadium was supplied by miners globally,
including from key players Glencore, Largo, and Bushveld, with 92%
of this going towards steel production and 2% being supplied to the
VRFB market. In steel production, vanadium is used as a
strengthening agent in rebars, buildings, and other industrial
infrastructure. As such, VRFB developers will be competing against
steel producers for the supply of vanadium. The limited growth in
vanadium supply, and its continuously increasing demand and
concentration of supply in China
and Russia, will keep the cost of
vanadium high in the medium-term. However, junior miners are
exploring opportunities to establish new vanadium mines, with focus
mostly in Canada and Australia. The successful exploitation of
these resources could see greater vanadium supply, potentially
lowering its cost and thus facilitating reduced VRFB CapEx and
improving its economic case.
VRFB developers could also rent electrolyte from a vanadium
supplier over the lifetime of the VRFB. An example sees key VRFB
developer, Invinity Energy Systems, forming a company named
Vanadium Electrolyte Rental Limited (VERL), with Bushveld Minerals.
VERL offers the provision of electrolyte via a rental option to its
customers. This helps to reduce the capital cost of a VRFB, making
it more competitive with incumbent Li-ion batteries for stationary
storage applications. Clearly, however, the customer renting the
electrolyte would incur greater costs over the course of the VRFB
project's lifetime than if it were to pay the electrolyte supplier
with upfront capital. Electrolyte could also be recovered at the
end of the VRFB lifetime through ultrafiltration or other more
complex re-processing steps. The rented electrolyte could,
therefore, be collected by an electrolyte manufacturer and
reprocessed to produce vanadium pentoxide. Therefore, renting
parties can re-obtain the vast majority of their rented
electrolyte, improving the attractiveness of this business model
from their perspective.
VRFB player activity
Despite the economic barriers to be overcome to help facilitate
the more widespread commercial adoption of the VRFB, signs of
continued activity from key players suggest that this technology
will continue to be deployed, albeit in lesser volumes than Li-ion
batteries for stationary storage applications. IDTechEx estimates
that, cumulatively, over 800 MWh of VRFBs have been installed
globally up to 2022. This is skewed by a 400 MWh installation made
by Chinese RFB player Dalian Rongke Power in 2022. This is a 4-hour
duration of the storage system, supporting the connection of new
renewable generation sources to the Dalian grid and lowering the peak electricity
load in the region. A second phase of the project is expected to
bring the project to 200 MW / 800 MWh. Market activity from other
VRFB players includes installations made by key players Sumitomo
Electric Industries (Sumitomo), Invinity Energy Systems, H2 Inc.,
and CellCube. Also, in February 2023,
Sumitomo announced it will expand its RFB business, making an
initial US$7.6 million investment to
prepare for local production and installation of RFBs in the US.
Such players are looking to continue growing their project
pipelines and scale business operations.
Promise of cheaper RFB chemistries
Other RFBs which use cheaper and more widely available active
materials for electrolyte could, however, pose a future threat to
VRFB players. Other chemistries being developed include all-iron,
zinc-bromine, zinc-iron, and hydrogen-bromine, among more. The
electrolyte costs in these RFB systems are estimated by IDTechEx to
be approximately an order of magnitude less than vanadium
electrolytes, presenting a key advantage.
While many of these chemistries see a number of pilot projects
and commercial demonstration projects being deployed in recent
years, key player CMBlu Energy AG (CMBlu), developing an organic
redox flow battery (ORFB) technology, seem to be gearing towards
technology commercialization. In October
2023, Technology Group STRABAG invested €100M (~US$108M) into CMBlu. IDTechEx has identified
this as one of the largest funding rounds into a RFB company in
recent years, beaten only by Dalian Rongke Power (VRFB developer),
raising over US$145M, and WeView
(zinc-iron developer), raising over US$140M across 2022 - 2023,, respectively.
Moreover, Mercedes-Benz Group AG ordered an 11 MWh ORFB from CMBlu
in March 2024 and is expected to come
online in H2 2025, marking one of the largest projects of an ORFB
globally. While such developments signify ongoing commercial
activity for ORFBs, the field performance of these technologies
will be needed to start validating any technical advantages over
VRFBS or other RFB chemistries at commercial scale.
Future RFB application for Long Duration Energy
Storage
Regardless of chemistry, it is important to consider when demand
for RFB technologies is expected to increase. Li-ion batteries
exhibit a CapEx competitive with or lower than many of the
alternative RFB chemistries at shorter durations of storage (1 – 4
hours). Moreover, the round-trip efficiency of Li-ion batteries is
greater than that of RFBs, demonstrating another advantage. Li-ion
batteries have been deployed on a much wider scale than RFBs for
stationary energy storage applications, such as energy shifting, or
for providing ancillary services to the grid over short durations
(<1 hour). As such, this can make it difficult for RFB players
to penetrate the existing stationary battery storage market and
acquire sizeable market share.
However, as the penetration of variable renewable energy (VRE)
increases in electricity grids in key regions, as will the need to
manage the unpredictability and variability in electricity supply
from these sources. Energy storage systems will be needed to
dispatch energy over longer timeframes when energy from VRE sources
is not available. Redox flow batteries would be well suited as a
long duration energy storage (LDES) technology, given the ability
to decouple their energy capacity and power output. This can reduce
RFB CapEx (on a $/kWh basis) at longer durations of storage, making
them more economically feasible to deploy than Li-ion batteries at
these longer durations. However, demand for LDES technologies is
not expected to increase until the mid-2030s in key regions and
thus is when demand for RFBs, regardless of chemistry, is likely to
increase.
Redox flow battery outlook
Historically, the VRFB has been the dominant RFB technology and
is the most widely deployed and well-understood. However, its high
upfront cost has been one of the key barriers to its more
widespread deployment, and Li-ion batteries still dominate the
stationary battery storage market. Potential increases in vanadium
supply from the exploitation of new mines and the adoption of
electrolyte leasing models could reduce upfront VRFB costs,
improving their economic viability. In the short term, VRFBs are
still likely to dominate the RFB market due to more widespread
commercial demonstration and understanding of these technologies
and established supply chains already in place between electrolyte
and component suppliers and VRFB developers. However, players
developing cheaper RFB chemistries using more widely available
materials could look to take increasing RFB market share.
Ultimately, it is expected that demand for LDES technologies will
only increase in the next decade, in which RFBs are likely to be a
suitable candidate. Therefore, an increasing penetration of RFB
technologies, regardless of chemistry, is likely only in the longer
term.
For more information on RFB materials, players, value chains,
technologies, economics, and granular 10-year RFB market forecasts,
please refer to IDTechEx's market report 'Redox Flow Batteries
Market 2024-2034: Forecasts, Technologies, Markets'.
For more information on LDES technologies, players,
applications, revenue streams, electricity markets, variable
renewable energy (VRE) penetration, grid stability and flexibility,
and granular 20-year market forecasts, please refer to IDTechEx's
market report 'Long Duration Energy Storage Market 2024-2044:
Technologies, Players, Forecasts'.
For the full portfolio of energy storage market research from
IDTechEx, please visit www.IDTechEx.com/Research/ES. Downloadable
sample pages are available for all IDTechEx reports.
About IDTechEx
IDTechEx provides trusted independent research on emerging
technologies and their markets. Since 1999, we have been
helping our clients to understand new technologies, their supply
chains, market requirements, opportunities and forecasts. For more
information, contact research@IDTechEx.com or
visit www.IDTechEx.com.
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