Vanadium redox batteries use vanadium ions in different oxidation states as stores of potential energy. This energy flows through electrolyte to release the power. However vanadium is an expensive metal contributing up to a third of the total cost. A battery company in Oakland, California has begun renting the vanadium in its redox flow batteries to its clients instead.
Won’t Renting Vanadium Increase the Overall Cost?
Yes it will, but this is about cash flow. Businesses have been renting cars for a long time, in full knowledge they would cost less for cash. Besides, vanadium flow batteries have huge potential for replacing lithium-ion ones for energy storage. Every dollar off the upfront price counts.
Renting vanadium cuts the cost of capital and the interest rate from borrowing. GreenTech media thinks the rental payments “will ultimately gobble up around 70 percent of those savings”; however the customer renting vanadium pockets the balance. The website reveals the battery company does not own the vanadium it hires out. Instead, it rents it in turn from an undisclosed supplier, we presume at a premium price.
Moreover, This Has Potential for Opening New Doors
Redox flow batteries are arguably superior to lithium-ion ones for storage, where bulk is not an issue. However, historic capital cost has been higher, holding the door open for lithium. If we can find a way to lower capital cost sufficiently, then this limiter falls away.
We are not quite there yet. Lithium-ion systems with four-to-six-hour duration cost roughly half as much as flow batteries on a per-kilowatt-hour basis. Hence reducing redox battery capex by a third does not completely close the gap. However, something down the line arguably does.
Low vanadium availability is holding prices high, because there are few processing plants. However supply is abundant. Therefore, if flow batteries take off, supply will increase. And vanadium prices may come down sufficiently to close the lithium-ion gap.
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Preview Image: Containerized Vanadium Flow Batteries
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