Investing in Vanadium Redox Batteries
Lithium has been the most relevant energy metal over the past few years.
In recent months, cobalt has become the energy metal favored by investors.
The demand for both of these metals is set to increase rapidly as demand for lithium-ion batteries continues to grow. But the energy metal with the biggest upside right now is one you might not associate with energy, or even know: vanadium.
There's nothing particularly exciting about vanadium. It's actually quite boring. Vanadium is an industrial metal that’s used mostly to harden steel. About 90% of vanadium demand currently comes from the steel industry.
High-strength vanadium-alloy steels are used in high-rise buildings, bridges, heavy equipment, industrial tools, automotive parts, medical devices, ship plates, rail lines, turbine engines, airframes, military vehicles, and tools.
Over the past 12 months, the price of vanadium has been increasing due to higher demand and tightening supplies from China. But what makes vanadium the energy metal of the future is its application in battery technology.
In particular, I’m talking about the arrival and proliferation of the vanadium redox battery (VRB).
Originally conceived by NASA during the energy crises of the 1970s, vanadium redox batteries mainly consist of two tanks of liquid. This liquid flows adjacent to each other and past a membrane, which generates a charge by moving electrons back and forth. Due to their size and weight, these batteries are expected to be mainly used for grid storage.
Currently, grid energy storage facilities use lithium-ion batteries to store electricity. But lithium-ion batteries have flaws.
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Aside from their tendency to catch on fire, lithium-ion batteries lose their ability to recharge over time. There's no doubt you've experienced this firsthand. Cell phone batteries are notorious for losing their ability to recharge over time.
The vanadium redox battery is much safer, can last longer, and can be recharged infinitely! That could be a game changer for grid energy storage.
VRBs are also easy to recycle and good for projects where space isn’t an issue.
The flow battery market is expected to grow from $230 million this year to $946 million by 2023, at a CAGR of 33%. The VRB seems set to radically increase the global demand for vanadium.
Governments worldwide are committing billions of dollars to green energy projects, and electric grid facilities are popping up everywhere. And VRBs are beginning to be included.
China is now looking at how to best utilize VRBs for its electric grid. The China National Development and Reform Commission recently released a policy document that called for the launch of pilot projects that will include multiple 100-MW-scale vanadium flow batteries by the end of 2020.
The role vanadium will play in the energy storage space remains to be seen. But optimism surrounding VRBs is rising. And it’s a space investors might want to keep an eye on.
Investing in vanadium isn't easy. There are no vanadium futures or options. And even though you can buy physical vanadium online, investing in the physical metal in this case is highly inadvisable due to liquidity.
With no direct investment access, investors must look to companies that mine vanadium or those that are manufacturing VRBs or developing VRB technology.
We are currently investigating several vanadium and VRB companies and plan to bring you some new ideas soon. Stay tuned.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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