Your browser is not supported. Please update it.

24 May 2019

Canada’s Vanadium Flow player wins massive Australian grid contract

Our first ever interview on Rethink Energy was about CellCube Vanadium Flow batteries with UK distributor Immersa, and we caught up this week with the CEO of Canada’s CellCube, which makes, installs and maintains Vanadium Flow grid scale batteries, who makes it clear that 2020s will be the tipping point for batteries. He later shows a graph from Navigant Research which suggests that long duration energy storage is cumulatively a $92 billion opportunity by 2027 when annually it will be a $23 billion business.

CEO Stefan Schauss is an evangelist for the technology and this week the company announced it had a Letter of Intent from Australia’s Pangea Energy, a subsidiary of a South East Asian solar specialist which is chasing the network stability market in Australia. This is a particularly pertinent issue for Australia which has closed down many coal power plants, and this has made grid stabilization something of an issue. It plans to spend a total of $200 million on this project over the years with much of it spent on CellCube batteries and electrolyte. Pangea Energy will build, own and operate the site and procure from CellCube.

The battery will operate at 50MW peak and a total of 200MWh of energy, in a broad range from 2 to 12 hours. The companies are currently conducting due diligence and reviewing the offtake conditions for starting constructions in late 2019 with plans to be operational during 2020.

Schauss goes straight onto the attack against Lithium Ion batteries. “I worked in Lithium for a couple of years, but Flow batteries genuine have a longer life-cycle and none of the deterioration that goes on in Lithium.” Vanadium Flow have been shown to have 11,000 full discharges in their lifetime without deterioration, he claims.

He is referring to the fact that over a period of 10 years of complete re-charges, Lithium batteries tend to slide to around 70% of their capacity, and risk having to be exchanged if they fall below 60% of their original performance spec and begin to see excessive thermal runaway.

Schauss is keen to mention the explosion. Just so we are clear back in April Fluence, the US joint venture between Siemens and AES hit a problem at the Arizona Public Service where a 2 MW battery which had been installed since 2017 spontaneously set fire and exploded.  “They tend to do that,” said Schauss,“ if they get to 60% capacity.” We can see Schauss is not so much delighted, but still positive at this outcome, because it puts his own chosen technology into a such a good light.

“We have our own insurance company for our projects, there are no fire risks, because our process is not a chemical reaction, it is an electron flow. In 11 years of operation and 136 projects and no fires, and we have only had one incident, and that was when someone outside set up a barbeque and set off the smoke alarm.”

CellCube is clear that it has finally reached the level where in 2 hour, 4 hour, 6 hour, 8 hour and 12 hour configurations it can compete with the Levelized cost of storage (LCOS) with Lithium Ion batteries. “We can do what Lithium does, but for longer,” he says.

But to meet the $250 per kWh in a fully containerized attached system, complete with inverter and any other equipment, CellCube has had to take full control of its production costs. It could not afford contract manufacturing or to be at the whims of the price of Vanadium – so it has secured its own Vanadium mines, and creates its own electrolytes. Not every Vanadium Flow specialist has gone to that much trouble, but with an R&D heavy Lithium battery market, especially those focused on Electric Vehicles, it was essential so that CellCube could control all aspects of its Bill of Materials.

Schauss sees CellCube batteries used to fill up on cheap energy from the grid at night, selling it again in the morning, then replenishing it from solar and selling it once again in the afternoon, to make the best use of this multi-cycle battery capability and to maximize profit.

CellCube has just come out with its 4th product iteration, cutting 30% off the price, and adding 25% to its peak power. Investment materials seen by Rethink Energy says this will hit $200 per kWh in its next iteration, and $99 in its 6th generation device planned for even larger scale projects.

Because of these numbers Schauss says it can edge Lithium in both financial and actual performance and that he now has 65 ongoing projects, which would represent 1GW of capacity and $1.5 billion in business if he won all of them. All these deals will pick a winner within 12 months, and potentially his business could scale close to $1 billion in revenues, he claims.

“The reason that batteries are on the verge of taking off is because solar and wind have now reached critical mass on many national electricity grids, and as the LCOE on batteries have come down, the combined price of batteries plus renewables, is below that of a gas turbine. They can be configured for the grid as a virtual power plant, for less than the cost of an additional gas plant.”

There will be more opportunities to use batteries both in front of solar and wind farms, and also for grid stability, especially as more countries close down their coal plants as Australia has, and as grids change so they can use storage both in front of and behind the meter.

We can’t help thinking that Lithium will continue to innovate with a lot of majors behind it as a technology, but given that one small Canadian firm seems to be able to keep up in cost terms with their best R&D efforts, it could be that there will be a major swing towards Vanadium Flow batteries, which might well turn CellCube into a takeover target.