5. Battery energy storage market
AEMO's 2024 ISP forecasts the requirement for medium duration (four to 12 hours as defined by AEMO) storage in the National Electricity Market (NEM) to grow from approximately 13GWh in 2024/25 to an estimated 32GWh by 2030, and 81GWh by 2040 (excluding deep storage
requirements already allocated to large scale pumped hydro projects).20
The South-West Interconnected System Demand Assessment (SWISDA) forecasts an additional 50GWh of growth to 2040 for the Wholesale Electricity Market (WEM) in Western Australia (excluding smaller regional networks and microgrid systems).21
Combined, the NEM and the WEM are expected to require an average of 7GWh of new installed medium storage per annum.
The implied average duration for AEMO's forecast energy storage capacity, excluding pumped hydro, is approximately 11 hours.
The inherent ability to scale VFB BESS power and duration separately is a key differentiator to lithium-ion BESS, allowing VFB BESS systems to be expanded to add duration to meet AEMO requirements, which may drive an improved LCOS.
VSUN Energy is currently in discussions with several sophisticated energy offtakers for the potential
deployment of VFB BESS solutions in Australia.23 VSUN Energy is continuing to progress these
discussions, with the aim of having a developed pipeline of projects for the deployment of utility scale
VFB BESS solutions.
6. Next steps
The work completed in Phase 1 has given the Company confidence to proceed with Phase 2 of Project Lumina, to deliver the detailed design of a VFB BESS solution, which is expected to refine the Phase 1 assumptions and develop an executable delivery strategy. Key aims of Phase 2 include the:
• Development of a construction-ready, detailed design and delivery strategy for modular,
commercial, turnkey, utility-scale 100MW VFB BESS on a 4-hour (100MW/400MWh) and 8-
hour (100MW/800MWh) duration.
• Delivery of a definitive basis for estimates of LCOS, capital cost, operating cost and revenue
opportunities, refining from the Phase 1 accuracy of ± 30%.
• Exploration of the option of a ‘deconstructed' VFB BESS to drive optimised economic returns
and to potentially extend operational life to 40 years and beyond.
• Optimisation of the design with a cost-effective means of independently scaling either power
(MW) or duration (MWh of discharge) to capture opportunities emerging from the evolution
of the Australian energy markets and deliver a competitive advantage via in-built optionality.
• Advancement of conversations with potential energy offtake partners for the deployment of
energy storage solutions.
• Progression of discussions on land access for the future deployment of energy storage
solutions.
• Continued development of a funding strategy (debt and equity) to allow for the rapid
deployment of energy storage solutions.
• Determination of the merits of deploying a VSUN Energy Build-Own-Operate (BOO) business
model as well as delivering on an engineering, procurement and construction (EPC) basis.
VSUN Energy has a team of leading VFB industry experts to support the development of Project Lumina and the execution of this strategy.24
The intention of Phase 2 is for the Company and potential third-party investors to be able to make a final investment decision (FID) on the deployment of utility scale VFB BESS solutions by VSUN Energy in Q3 CY2025.
The Company recognises that, as the work progresses and options are explored, the timeline may change.
The Company is considering a range of funding options for the deployment of VFB BESS from Project Lumina, which is expected to be funded by a mix of debt and strategic equity or cornerstone equity funding options, including Australian Government Agencies. AVL will continue to progress discussions, with the aim of delivering funding options with the project FID. VSUN Energy will develop projects through gated development stages and projects will only be progressed if they meet investment hurdles, such as an acceptable internal rate of return (IRR).
Project Lumina has the potential to position the Company as a globally competitive supplier of BESS solutions and battery materials, realising its vertically integrated business model in Australia.
This facilitates the delivery of value across the supply chain from the Company's upstream Australian Vanadium Project, through its operational midstream vanadium electrolyte production capability and into VSUN Energy's downstream activities in energy markets. The successful implementation of this strategy would assist in providing a secure and resilient domestic battery supply chain, in alignment with the Australian Government's National Battery Strategy which is part of its Future Made in Australia agenda.25
For further information, please contact:
Graham Arvidson, CEO
+61 8 9321 5594
(20min delay)