Ann: Emerging Companies Copper Conference Presentation, page-66

Grid scale batteries need to be huge. They need to store hundreds of megawatt-hours of energy at a time. That’s enough to power thousands of homes for many hours.

Today, lithium batteries are the most used in this role. But they have some serious flaws:

• Fire danger – lithium batteries are prone to overheating and causing fires. At grid-scale this is a serious problem.
• Low energy density – lithium is light, which makes it the best fit for EVs. But it has relatively low energy density. That limits their ability to store a lot of energy in a given space.
• Limited duration – lithium batteries are best used for short-term storage.
• Degradation – lithium batteries have a limited number of charge/discharge cycles before they begin to decline. We see that in the battery life of a typical cell phone.
• Cost – lithium batteries are expensive for grid-scale storage.

The need for this technology is huge. And lithium clearly isn’t the long-term solution.

In 2023, the global grid-scale battery market was $1.05 billion. Forecasts for growth range from 26% compound annual growth to 32% compound annual growth through 2031.

The winner in the grid scale battery war appears to be “flow batteries”. These batteries use chemical reactions in fluids to convert between chemical and electrical energy. While too heavy for vehicle applications, they make up for that in lower cost, high energy density, and long lives.

A typical flow battery can last between 10,000 and 20,000 cycles without requiring rest. A lithium battery can go about 3,000 cycles.

That’s why these batteries are so valuable for grid-scale applications.

Vanadium redox flow batteries (VRFB) appear to be a favorite in China today. And that mystery metal was discussed earlier is vanadium. This simple metal goes mostly (85%) to steel making. It’s also used in some alloys and as catalysts. But in the future, VRFBs will dominate the demand for the metal.

If that sounds familiar, it should. This is the same path that lithium took. The difference is that the vanadium price got beaten down over the past two years:

That looks like an opportunity, thanks to the emergence of VRFB technology.

Analysts at Wood Mackenzie published this outlook for VRFB demand:

This looming demand should inject life back into the vanadium market. Particularly because these batteries moved from conceptual to actual. China has some huge VRFB systems under construction.

• Dalian: 100 Megawatts (MW)/400 Megawatt Hour (MWh) system expandable to 200MW/800 MWh
• Hubei: 100 MW/500 MWh system

China is expected to reach an annual VRFB deployment of 14.5 GWh by 2031. That dwarfs the rest of the world. However, other countries are following quickly. Japan’s Sumitomo Electric installed a 15 MW/60 MWh system in Hokkaido in 2019. And the UK has a 2 MW/5 MWh system. Australia and Canada are also leaders in the VRFB space.

The outlook for vanadium is excellent. The supply of vanadium is low. That means any extra demand will push prices higher. And we are sitting at the bottom in demand right now. All eyes remain on China for guidance on vanadium prices. But as we sit at the low end of things right now, most scenarios take the vanadium price higher from here.

This looks a lot like the early days of lithium and EVs.