Text introduction:

All vanadium flow battery, also known as vanadium redox flow battery (VRB), is an advanced and widely used vanadium based redox flow battery. A flow battery refers to a type of battery composed of a stack (including electrodes and ion exchange membranes), an electrolyte storage and supply unit, and a battery management and control unit. The main difference from other batteries is the storage method of the electrolyte. During operation, the positive and negative electrolytes enter the positive and negative cell units of the stack through a circulation pump from the positive and negative electrolyte storage tanks, and then return to the positive and negative electrolyte storage tanks through pipelines to complete the circulation. In the stack, both positive and negative electrolyte active substances undergo electrochemical reactions on the electrodes. During the reaction process, only the valence state changes without phase transformation. The positive and negative electrolytes are separated by ion exchange membranes and exchange charges.

The all vanadium flow battery technology was first proposed and patented by the University of New South Wales in Australia in 1984. After more than 30 years of development, the core technology is mainly mastered in countries such as Japan, China, Australia, and Canada. Japan is a country with a shortage of electricity and has years of experience in developing large-scale chemical flow battery energy storage systems through group development. Since 1985, Sumitomo Electric (SEI) and Kansai Electric Power Company of Japan have been collaborating to develop vanadium batteries. Afterwards, Sumitomo Electric became a Japanese company with a complete set of technology for producing and assembling vanadium battery systems, ranking first in the world in terms of technological maturity. North America mainly focuses on startups and small and micro enterprises, and has carried out commercial promotion of all vanadium flow batteries with support from the US Department of Energy and others. In 2021, the US Department of Energy announced a funding of $4.19 million to support Largo's development of an efficient all vanadium flow battery production process.

Vanadium batteries have flexible configurations and decoupled power and capacity. The key driving factors of vanadium batteries include their flexibility, durability, safety, environmental friendliness, and full lifecycle cost advantages. Configuration flexibility: The vanadium battery design is flexible, with independent power and capacity design. The output power of the battery is determined by the size of the battery stack. Increasing the number of individual batteries and the effective area can increase the power of the battery stack; The capacity of a battery is determined by the amount of electrolyte. Increasing the volume and concentration of electrolyte can increase the battery capacity; The power and capacity can be adjusted according to the load size of various application sites and fields. For large new energy power plants, increasing energy storage capacity can reduce the equilibrium cost per kilowatt hour.

The scale of the new energy storage market is vast. According to CNESA statistics, as of the end of 2021, the cumulative installed capacity of power storage projects in China has reached 46.1GW, accounting for 22% of the global market size. Among them, the cumulative installed capacity of pumped storage energy is 39.8GW, accounting for 86.3%, a decrease of 3 percentage points from the same period last year; The market growth mainly comes from new energy storage, with a cumulative installed capacity of 5.73GW, a year-on-year increase of 75%, accounting for 12.5%.

With the gradual improvement of the electricity market and the supporting energy storage supply chain, new energy storage will show a steady and rapid growth trend in the market with advantages such as short construction cycle, small environmental impact, and low site selection requirements. According to CNESA's prediction, the cumulative installed capacity of new energy storage under conservative scenarios will have a compound annual growth rate of 53.3% from 2022 to 2026, and will reach 48.5GW by 2026; In an ideal scenario, the annual compound growth rate is expected to reach 69.2% from 2022 to 2026, and the cumulative scale is expected to reach 79.5GW by 2026.

Ion exchange membranes and electrodes are key to optimizing the performance and cost of vanadium batteries

The stack is the main part of vanadium batteries, accounting for 35% of the cost of vanadium batteries. Its core lies in ion exchange membranes, electrodes, and bipolar plates. Ion exchange membranes are used to block the positive and negative electrodes of electrolytes, selectively passing through particles that meet the conditions, which not only closes the circuit but also hinders the self discharge phenomenon caused by cross contamination of vanadium ions with different valence states between electrolytes; Electrodes are the places where electrochemical reactions occur; The surface of the bipolar plate is engraved with flow channels to reduce the pressure loss of electrolyte flow in the system and reduce pump power.

Electrolyte is an important component of vanadium batteries

Electrolyte is an important component of vanadium batteries, accounting for approximately 40% of the cost of vanadium batteries. The positive electrode electrolyte of a vanadium battery is composed of a sulfuric acid solution containing V5+and V4+ions, in the form of VO2+and VO2+in the solution. The negative electrode electrolyte is composed of a sulfuric acid solution containing V2+and V3+ions.

Due to the low solubility of V2O5, it is not possible to directly dissolve V2O5 powder into acidic solutions to prepare electrolytes. For economic reasons, electrochemical dissolution or chemical reduction methods are commonly used in industry to assist in obtaining high concentration vanadium ion solutions. The former first dissolves a small amount of V2O5 powder in sulfuric acid, and through external power supply and continuous feeding, finally obtains equal concentrations of V (IV) and V (III) solutions at the cathode of the electrolytic cell, which can be directly used for charging and discharging cycles of vanadium batteries. The latter involves mixing V2O5 powder with sulfuric acid, then adding reducing agents such as oxalic acid or hydrazine hydrate to obtain a V (IV) solution. A single valence state solution is then electrolyzed to obtain electrolytes for vanadium batteries with different valence states.

The upstream raw material of the electrolyte is mainly vanadium, which is difficult to exist in single form in nature and mainly exists in the form of vanadium ore. Vanadium ore is a mineral containing vanadium, including vanadium titanium magnetite, vanadium bearing stone coal, potassium vanadium uranium ore, and petroleum associated minerals. The main vanadium ore resources in China are vanadium titanium magnetite and vanadium bearing coal.

Panzhihua Steel Vanadium and Titanium is a leading domestic vanadium product. The main raw material for vanadium products in domestic enterprises is the by-product vanadium slag from steelmaking. Enterprises with larger production capacity mainly include Panzhihua Steel Vanadium and Titanium, Hebei Iron and Steel Group Chenggang Company, Beijing Jianlong Heavy Industry, Chengdu Chongqing Vanadium and Titanium, and Sichuan Desheng Group. Among them, Panzhihua Steel Vanadium and Titanium has an annual production capacity of 40000 tons, ranking first in the country.

Longbai Group announced in July 2022 that it plans to invest 2.5 billion yuan to construct an annual production of 30000 tons of vanadium pentoxide innovative demonstration project. The project will be implemented in stages, with the first phase constructing an annual production of 15000 tons of 98% V2O5 and 3.6 million tons of iron concentrate alkaline pellets; The second phase of construction aims to produce 15000 tons of V2O5 and 3.6 million tons of alkaline iron concentrate pellets annually, ultimately achieving an annual production of 30000 tons of 98% V2O5 and 7.2 million tons of alkaline iron concentrate pellets. The construction period is 31 months. Shaanxi Qinfeng Technology held a groundbreaking ceremony for the annual production of 11000 tons of vanadium pentoxide project in Shangnan County, Shaanxi Province in February 2022, with a planned investment of 890 million yuan. Hubei Construction Engineering Group signed a contract for the production of vanadium electrical materials and vanadium batteries project in Yidu, Hubei in April 2021, with a total investment of 1 billion yuan. The first phase will build an annual production line of 3000 tons of vanadium pentoxide, and the second phase will build an annual production line of 6GWh of vanadium batteries.

Vanadium has a wide range of downstream applications

In modern industry, vanadium iron and metallic vanadium are mainly used in the steel metallurgy and aerospace industries; Vanadium containing compounds applied in the chemical and battery industries; Vanadium element can be used as a material additive in hard alloys, magnetism, superconductivity, and nuclear reactor materials; Vanadium oxides and their compounds can be effectively applied as colorants in the glass and ceramic industries; Finally, as a new field, vanadium is also used in the production of high-tech materials such as vanadium batteries, rare earth vanadium, vanadium nanoparticles, and vanadium thin film materials.

Proton exchange membranes have ushered in new applications, and ion exchange membranes are key components of vanadium batteries

Ion exchange membrane is an important structural component in vanadium flow batteries, which can separate the anode and cathode electrolytes and selectively pass through particles that meet the conditions. This not only closes the circuit but also hinders the self discharge phenomenon caused by cross contamination of vanadium ions with different valence states between electrolytes.

The membrane of vanadium redox flow batteries should have the following characteristics: low permeability to vanadium ions and water molecules, reducing the tendency for self discharge; Has high transport capacity for protons or selective anions (sulfate ions), reduces membrane resistance, and reduces efficiency losses caused by membrane internal resistance; Excellent cycling stability and chemical stability; Lower manufacturing costs.

Foreign companies still dominate the proton exchange membrane market

Proton exchange membranes have long been monopolized by a few manufacturers in the United States and Japan, such as DuPont, Gore, and Asahi, due to their complex preparation processes. DuPont is the earliest company in the world to develop and sell proton exchange membranes. As early as 1962, it developed high-performance perfluorosulfonic acid proton exchange membranes, namely the Nafion series products. Up to now, Nafion membranes are also the most widely used in the world. At present, the price of perfluorosulfonic acid membranes from foreign brands is relatively high. Taking Nafion117 as an example, the price ranges from $500 to $1000 per square meter; The price of Nafion212 ranges from $300 to $400 per square meter, and the high priced film also to some extent inhibits the promotion of vanadium batteries. Domestic enterprises represented by Dongyue and Kerun are also committed to the localization of proton exchange membranes, currently mainly focusing on the production and technological breakthroughs of perfluorosulfonic acid proton exchange membranes in mainstream demand.

The market size of ion exchange membranes for vanadium batteries is expected to exceed 6 billion yuan

According to the environmental impact assessment report of Weilide, the ion exchange membrane required for producing 1MW of vanadium batteries is about 830 square meters. According to our calculation, the new installed capacity of vanadium flow batteries will reach 0.13GW in 2021, and the ion exchange membrane consumed will reach 108000 square meters. It is expected that the new installed capacity of vanadium flow batteries will reach 4.93GW in 2026, and the ion exchange membrane consumed will reach 4.0933 million square meters, with a market size of 6.26 billion yuan.

Carbon felt electrodes drive an increase in demand for carbon fibers

Vanadium batteries have special requirements for electrode performance, which is different from the intercalation mechanism of traditional lithium battery electrodes (reversible intercalation and extraction of electrolyte ions in the layered material lattice of the electrode). The electrodes of all vanadium flow batteries do not directly participate in the reaction, but only provide reaction active sites on the electrode surface for electrochemical reactions. When an electrochemical reaction occurs, these active sites effectively reduce the activation energy required for the reaction to occur, allowing the electrochemical reaction to proceed smoothly.

The electrode material of all vanadium flow batteries needs to have the following characteristics: the electrode material has good chemical stability, acid resistance and oxidation resistance to ensure a long service life of the electrode; Superior electrocatalytic activity can improve the electrochemical reaction rate, i.e. enhance the rate performance of vanadium flow batteries; High specific surface area/effective electrochemical surface area to ensure full contact between the electrode and electrolyte, increase the total amount of electrochemical reaction per unit volume of electrolyte, and thus improve electrolyte utilization efficiency; Good conductivity can reduce the internal resistance of batteries and reduce electrochemical polarization during charging and discharging processes.

Many small and medium-sized manufacturers are laying out carbon felt/graphite felt

Carbon felt and graphite felt are both carbon fiber materials, which have a series of excellent properties that cannot be replaced by other materials, such as lightweight, high strength, high modulus, conductivity, thermal conductivity, corrosion resistance, fatigue resistance, high temperature resistance, and low coefficient of expansion.

At present, domestic carbon felt/graphite felt is mainly laid out by small and medium-sized enterprises such as Nako New Materials, Gansu Fulai, and Jilin Shenzhou that have not yet been listed. These enterprises purchase carbon fibers from mainstream carbon fiber factories and further process them to produce carbon felt/graphite felt for sale to downstream vanadium battery integration manufacturers such as Rongke Energy Storage and Shanghai Electric.

The installed capacity of vanadium batteries drives the scale of the carbon felt market

On the one hand, as the vanadium battery market grows and the installed capacity increases, the demand for carbon felt will rise sharply; On the other hand, as the overall demand for carbon fiber increases and the production scale continues to expand, the unit price of carbon felt is expected to be adjusted downwards.

According to the environmental impact assessment announcement of Weilide, the carbon felt required for producing 1MW of vanadium batteries is about 1450m2. In 2021, the new installed capacity of vanadium flow batteries will reach 0.13GW, and the carbon felt consumed will reach 189000 square meters. It is expected that in 2026, the new installed capacity of vanadium flow batteries will reach 4.93GW, and the carbon felt consumed will reach 7.151 million square meters, with a market size of 722 million yuan.