Invitation forThe 21st China Ferro-Alloys International Conference

[Ferro-Alloys.com]  Realising AVL’S Utility-Scale Vanadium Flow Battery Strategy

KEY POINTS

• The Company’s wholly owned subsidiary, VSUN Energy Pty Ltd (VSUN Energy), has commenced Project Lumina, the development of a modular, scalable, turnkey, utilityscale battery energy storage system (BESS) using vanadium flow battery (VFB) technology, for use in Australian energy markets.

• Analysis completed by VSUN Energy indicates the merits of a 4-hour 100MW VFB BESS with a levelised cost of storage (LCOS) of A$274/MWh (± 30%). Such an LCOS for a VFB BESS would be competitive with the LCOS of similar lithium-ion BESS products currently in the market.

• Project Lumina is an important next step in VSUN Energy’s ongoing objective of developing solutions to address Australia’s growing requirement for long duration energy storage, while providing AVL with an opportunity for offtake of its planned production of vanadium oxides from the Australian Vanadium Project and Australianmanufactured vanadium electrolyte, as part of the Company’s ‘pit to battery’ strategy.

• AVL is considering a range of funding options for Project Lumina at either parent company or asset level within the AVL group, which is expected to include debt supported by strategic equity or cornerstone equity funding, including from Australian Government agencies.

Australian Vanadium Limited  is pleased to announce Project Lumina, targeting the development by VSUN Energy of a BESS that is modular, scalable, turnkey and suited for medium to long duration battery storage applications of utility scale, employing wellestablished VFB technology optimised for local conditions. VSUN Energy has completed Phase 1 of Project Lumina, indicating that the LCOS of a 100MW VFB BESS would be competitive with the LCOS of lithium-ion BESS products of similar capacity that are currently available in the market. Figure 1 below compares Project Lumina’s LCOS estimated range for a 4-hour and an 8-hour 100MW VFB BESS with that for a similar utility scale lithium-ion BESS.

This work has given the Company confidence to proceed with Phase 2 of Project Lumina, being the detailed design of a VFB BESS solution. Should this satisfy the Company’s gated development process, it would deliver a utility scale energy storage solution for deployment to address Australia’s growing requirement for long duration energy storage for the energy transition.  

AVL’s Chief Executive Officer, Graham Arvidson comments, “We are pleased to be able to share the significant steps that we have taken to develop the downstream value of our business. The need for long duration energy storage in Australia is rapidly growing and the work the team is undertaking with Project Lumina is a key enabler to create a platform for us to deliver competitive long duration battery energy storage solutions.

“The scale of the projects VSUN Energy is pursuing aims to provide AVL with the ability to utilise our own manufactured vanadium electrolyte, ultimately unlocking the development pathway and full value of the Australian Vanadium Project.”

Details of Project Lumina are set out below, with the aim of Phase 1 of the project to assess the likely cost competitiveness of a VFB BESS solution and Phase 2 to undertake engineering design and funding for project execution of a VFB BESS solution:

1. Purpose of Project Lumina

As part of the Company’s vertically integrated ‘pit-to-battery’ strategy,8 Project Lumina is focused on growing the VFB BESS market in Australia through the Company’s wholly owned subsidiary, VSUN Energy. This strategy is designed to create an offtake pathway for vanadium oxides produced from the Company’s proposed Australian Vanadium Project. These vanadium oxides would be utilised in the midstream production of vanadium electrolyte,9 supporting VSUN Energy’s downstream VFB BESS installation, operation and maintenance business. In growing the VFB BESS market, Project Lumina aims to develop a modular, scalable, turnkey, utility-scale BESS using VFB technology.

AVL’s upstream exposure to future vanadium production from its high-grade Tier-1 Australian Vanadium Project is a key competitive advantage for Project Lumina. In the early stages of VFB BESS deployment, third-party vanadium oxides can be used to advance the battery strategy independently of the Australian Vanadium Project’s timeline. However, longer term, the Company’s strategy remains focused on utilising its own high purity vanadium oxides in future VFB BESS deployments.

2. Battery technology selection

Project Lumina proposes to use proven technology provided by leading international VFB original equipment manufacturers (OEMs) and engage Australian based engineering and design expertise to optimise the design and delivery for Australian conditions to assist in derisking deployment of VFB BESS at utility scale.

One of the major benefits of VFB BESS, compared to lithium-ion BESS, is their ability to conduct multiple full and partial charge and discharge cycles per day without significant degradation over time. That flexibility allows the optimisation of the pricing arbitrage between charge and discharge cycles, as well as increasing the available hours of discharge potential throughout the day. Further benefits of VFB BESS include:

• Proven technology with a history of nearly 20 years of grid-connected VFB BESS.

• Ability to expand discharge duration to over 4 hours, highly suited to 8-12 hour applications.

• The potential for full depth of discharge through life of battery.

• The operating life of a conventional VFB BESS has traditionally been estimated at 30+ years.

As part of Phase 2 of Project Lumina, VSUN Energy is proposing to design the VFB BESS to extend this to 40+ years in a ‘deconstructed’ form.11

• Non-flammable technology.

• High temperature tolerance, with minimal requirements for heating and cooling infrastructure.

• Potential for positive end-of-life environmental impact, with the likelihood of over 99% of commercial end-of-life reuse and recyclability.12

3. Phase 1 of Project Lumina

VSUN Energy recently completed Phase 1 of Project Lumina, an internal analysis which has undergone an independent external review, to assess whether a VFB BESS solution is likely to be competitive in the energy storage market.

The outcome of Phase 1 indicates the merits of a modular, scalable, turnkey, utility-scale 100MW VFB BESS solution capable of delivering LCOS of A$274/MWh for a 4-hour VFB BESS and LCOS of A$251/MWh for an 8-hour VFB BESS.13 The LCOS calculations used scoping study level capital and operating cost estimates and inputs to calculate a LCOS at ± 30%.

Phase 1 has determined that a 100MW VFB BESS is likely to be the optimal base unit for deployment. VSUN Energy is developing a modular unit to allow for a VFB BESS solution that could be scaled in terms of power and/or duration to meet specific demand requirements. With growing demand for grid-scale energy storage to support the transition to renewable energy, this storage solution is anticipated to ultimately be scaled and deployable on a gigawatt-hour scale.

VSUN Energy will run parallel work for both a 4-hour (100MW/400MWh) VFB BESS and an 8-hour (100MW/800MWh) VFB BESS based on the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) projections that battery discharge requirements will increase to 8 to 12 hours over the next 5 to 10 years.14

4. Phase 1 LCOS calculations

For the technical, capital and operational metrics that support the LCOS calculations, VSUN Energy sought expressions of interest from leading international VFB OEMs and Australian engineering, procurement and construction companies, to deliver initial cost estimates for a fully deployed and grid connected 100MW VFB BESS.

• [Editor:tianyawei]