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China’s big battery sector lights a rocket under vanadium prices

Stockhead logo Stockhead 24/03/2021 Reuben Adams
a close up of smoke: Rocket vanadium prices © Stockhead Australia Rocket vanadium prices

The vanadium investment buzz of late 2018, when V2O5 prices peaked above $US35/lb, was sparked by the nascent battery storage thematic.

The rate of stationary storage was about to grow exponentially and 25 per cent would be comprised by vanadium batteries — also known as vanadium redox flow batteries (or VRFBs).

VRFBs are a perfect fit for large scale stationary storage.

But this was investor speculation in a market that had not really established itself yet. These high prices vanished almost as quickly as they arrived.

By mid 2019 V2O5 prices settled around the $US4/lb to $US7/lb mark and all those bandwagon ASX explorers – the ones without quality projects – quickly moved on to the next big thing.

In early 2021, what’s left are the quality explorers and an industry building to meet projected demand from the burgeoning steel and nascent battery sectors.

Steel still accounts for around 90% of vanadium consumption.

Of the remainder, 9% is used in aerospace alloy and chemical catalysts, and 1% goes into VRFBs, according to Argus.

Vanadium prices are now stirring as steel consumption soars and VRFB developments become real.

chart, line chart: Vanadium prices over the past 3 years. © Provided by Stockhead Vanadium prices over the past 3 years.

As long as vanadium prices don’t get too high the small battery sector could really take off.

China’s aim to accelerate a transition to lower energy consumption and to stimulate demand for renewable energy and energy storage products has prompted local companies to get cracking on VRFB developments, Argus says.

On March 15, VRB announced plans to build a 100MW solar photovoltaic and 100MW/500MWh vanadium flow battery integrated power station in central China’s Hubei province.

Shanghai Electric has unveiled plans for a 100MW/400MWh VRFB project in Yancheng in east China’s Jiangsu province.

Rongke Power is on track to launch a 200MW/800MWh facility in Dalian in northwest China’s Liaoning province this year.

The list goes on. How much vanadium could these batteries potentially soak up? A lot.

“Market participants estimate around 9.25t of vanadium pentoxide is used in each MWh of vanadium storage battery,” Argus says.

“China is expected to install around 30-60GWh of new energy storage capacity by 2030, corresponding to 28,000-56,000 t/yr of extra demand for vanadium pentoxide during 2021-2030.”

 

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