While the cost of renewable energies such as wind and solar have come down greatly in recent years, low availability continues to handicap renewable energy in certain energy markets.

In this article, I will examine the great growth opportunities in renewable energy for vanadium batteries in the $27 billion off-grid energy market.

Cost of Electricity by Source (from Wikipedia)

“In November 2015, the investment bank Lazard headquartered in New York, published a study on the current electricity production costs of photovoltaics in the US compared to conventional power generators. The best large-scale photovoltaic power plants can produce electricity at 50 USD per MWh. The upper limit at 60 USD per MWh. In comparison, coal-fired plants are between 65 USD and $150 per MWh, nuclear power at 97 USD per MWh. Small photovoltaic power plants on roofs of houses are still at 184-300 USD per MWh, but which can do without electricity transport costs. Onshore wind turbines are 32-77 USD per MWh. One drawback is the intermittency of solar and wind power. The study suggests a solution in batteries as a storage, but these are still expensive so far.

Below is the complete list of LCOEs by source from the investment bank Lazard.

Vanadium Batteries

The levelised cost of electricity (LCOE) is a measure of a power source which attempts to compare different methods of electricity generation on a consistent basis. It is an economic assessment of the average total cost to build and operate a power-generating asset over its lifetime divided by the total energy output of the asset over that lifetime. The LCOE can also be regarded as the minimum cost at which electricity must be sold in order to break-even over the lifetime of the project.”

The LCOE for wind and solar plants have come down so quickly due to innovation and economies of scale, that they are already at or below the LCOE of traditional base load coal, nuclear and gas plants.

Vanadium Batteries

Vanadium Batteries

Vanadium Batteries

Vanadium Batteries

The issue with wind and solar energy sources is their availability factor, according to Wikipedia

“Wind capacity factors range from 20–40% and solar capacity factors in Arizona are about 19%.”

The obvious solution is to invent utility scale batteries that can store solar power during sunny days and supply that power at night. Wind power needs are often the opposite (i.e. winds blow more at night). While such battery technology exists, it was not a practical solution until recently, as previously stated, due to its high cost which has come down through innovation and growing adoption (economy of scale).

Levelized Cost of Electricity imposed by Batteries

According to a great 2015 article titleld

Why Energy Storage is About to Get Big – and Cheap

by Ramez Naam, who spent 13 years at Microsoft. He holds 19 patents related to search engines, information retrieval, web browsing, artificial intelligence, and machine learning and is also the award-winning author of five books.

“Traditional lithium ion-batteries begin to degrade after a few hundred cycles of fully charging and fully discharging, or 1,000 cycles at most. So naively we’d take the capital cost of the battery and divide it by 1,000 to find the cost per kwh round-tripped through it (the LCOE). However, we also have to factor in that some electricity is lost due to less than 100% efficiency (Li-ion is perhaps 90% efficient in round trip). This multiplies our effective cost by 11%.

So we’d estimate that at the following battery prices we’d get the following effective LCOEs:

– $300 / kwh battery : 33 cent / kwh electricity storage

– $200 / kwh battery : 22 cent / kwh electricity storage

– $150 / kwh battery : 17 cent / kwh electricity storage

– $100 / kwh battery : 11 cent / kwh electricity storage

All of those battery costs, by the way, are functions of what the ultimate buyer pays, including installation and maintenance.

For comparison, wholesale grid electricity in the US at ‘baseload’ hours in the middle of the night averages 6-7 cents / kwh. And retail electricity rates around the US average around 12 cents per kwh. You can see why, at the several hundred dollars / kwh prices of several years ago, battery storage was a non-starter…

Right now, most of the talk about energy storage is about lithium-ion, and specifically about Tesla, who appear close to announcing a new home battery product at what appears to be a price of around $300 / kwh.

But there are other technologies that may be ultimately more suitable for grid energy storage than lithium-ion.

Lithium-ion is compact and light. It’s great for mobile applications. But heavier, bulkier storage technologies that last for more cycles will be long-term cheaper.”

Flow Batteries comes to mind

“1. Flow Batteries, just starting to come to market, can theoretically operate for 5,000 charge cycles or more. In some cases they can operate for 10,000 cycles or more. In addition, the electrolyte in a flow battery is a liquid that can be replaced, refurbishing the battery at a fraction of the cost of installing a new one.

  1. Compressed Air Energy Storage, like LightSail Energy’s, uses physical components that are likewise rated for 10,000+ cycles of compression and decompression.”

The downside for the Vanadium Redox Flow Battery (“VRB”) is its bulkiness and relatively lower round-trip efficiency (measured by power out over power in) of 75% compared to 85% with lithium batteries.

Here is my exercise to calculate the cost of running a VRB:

redT energy plc claims at its website that its Gen2 VRB machine price starts at $490/kwh

I called redT last week. They currently have about a dozen customers with a total of 2,000 kwh of deployment and I obtained general pricing information and calculated the all-in cost of their product as follows:

Vanadium Batteries

Thus, the LCOE of VRB and lithium batteries are similar at 33 cents per kwh. (assuming the cost of a lithium battery at $300 per kwh, VRB has a higher initial cost but more charge cycles with longer battery life). The 33 cents per kwh is the cost of storage and does not include the input cost of electricity.

On-Grid VRB Application

33 cents per kwh is more than what redT quoted me, which was 24 cents per kwh.

However, even at 24 cents per kwh, with retail electricity rates around the US average of 12 cents per kwh, VRB for the on-grid market still has some way to go, other than for specific applications such as

– Replacing natural gas peakers.

The energy grid has to be built out to support peak use. Peaker plants are reserve natural gas plants. On average, they’re active far less than 10% of the time. They sit idle, fueled, and ready to come online to respond to peaking electricity demand. Even in this state, bringing a peaker online takes a few minutes.

– Arbitrage on Tiered Pricing

From the same 2015 article by Ramez Naam Why Energy Storage is About to Get Big – and Cheap