Date: Feb 14, 2019

A new energy future portends at least two guarantees: that polluting, non-renewable fuels will be phased out, and replaced by cleaner, renewable alternatives. That much is certain, and the reasons why ought not need an explanation at this point. Still unclear, though, are the answers to ‘what’ and ‘how.’

Scientists and engineers convinced of this inevitability have long debated the merits of wind, solar, and other renewable sources of energy as opposed to fossil fuels. But any energy revolution will require an accompanying energy storage revolution to be practically and financially feasible – because when the wind doesn’t blow, or the sun doesn’t shine, batteries are the only way to keep the lights on.

And if the lithium industry instructs us of anything, it’s that this fact is hardly lost on any investor in the energy and extractives industries. Since the 1990s, lithium-ion batteries (LIBs) have been the standard bearer of the energy storage industry. And thanks to innumerable consumer and industrial applications, LIBs have gone virtually unrivaled in the energy storage space as far as investors, clean-energy advocates, industry, and government leaders are concerned. Yet, like the carbon-intensive fuels that preceded them, new technologies threaten to eventually fossilize LIBs.

Chief among them are vanadium-based storage systems (VBSS), or vanadium redox flow batteries, which offer tremendous advantages over lithium-ion battery storage. In addition to their longer operational lifespan, flow batteries, possess far superior capacity for electrical energy storage and output compared to their lithium-ion counterparts, making them especially attractive for use in local and regional energy grids. Even better, these capacities are subject to modification, and are technically unchallenging to scale to the user’s needs. What’s more, the durable mineral can be recycled as an additive in steel production, its conventional purpose.

Clearly the technical rationale for vanadium flow batteries over LIBs is sound, but the financial argument for investment is less durable – or at least that’s the case in the short and medium terms.

Right now, rapidly increasing vanadium prices are eroding years of cost reductions in flow battery manufacturing, which impacts the technology’s profitability and, in turn, weakens grounds for investment. An apparent global shortage in the last few months has pushed the price of the mineral to thirteen-year highs, with an additional 25% increase anticipated. At face value, these circumstances make the investment case for flow batteries even less appealing. But there is plenty of reason for optimism.

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