As the world races to decarbonize, there is an increasing focus on increasing the penetration of variable renewables such as solar and wind. This means that there will be a critical need for large storage systems for various energy storage applications. More importantly, long-term storage will play a key role. Redox flow batteries have long held promise to play an important role, and developments in this area have been extensively covered here at CleanTechnica.
Bushveld Minerals Limited, an AIM-listed integrated primary vanadium producer and energy storage solutions provider with ownership of high-quality assets in South Africa, has been working hard over the past six years to finally bring a large-scale vanadium redox flow battery (“ VRFB”). ) to South Africa and the African continent as a whole.
China is the world’s largest producer of vanadium, accounting for 60% of global vanadium supply in 2020, with the majority of vanadium coming from co-production. Russia is the second largest producer and South Africa the third largest, accounting for 17% and 7% of supply in 2021 respectively. Bushveld Minerals is a vertically integrated primary producer of vanadium. It is one of only three operating primary vanadium producers, owning 2 of the 4 operating primary vanadium processing facilities in the world. One of these facilities is the Vametco mine. Bushveld’s goal is to increase production organically to more than 8,400 mtVp.a. in the medium term.
Bushveld Minerals Limited through its 84% energy subsidiary Bushveld Energy Limited, has completed development and reached financial close for a 3.5 MW solar PV plus 1 MW / 4 MWh Vanadium Redox Flow Battery (VRFB) hybrid mini-grid project at the Vametco mine, which will operate as a funded Independent Power Producer (“IPP”).
Bushveld Energy and NESA Investment Holdings, a South African investment company, have signed a shareholder agreement as strategic equity partners in the implementation and financing of the project, with the project placed in a separate special purpose vehicle (SPV). The press release adds:
NESA provided 60% of the equity, while Bushveld Energy provided 40%. Bushveld Energy will recognize a development fee of ZAR 5.6 million as income from the project following financial close. ABSA Bank South Africa has approved a ZAR 64 million (approximately US$4.1 million) loan to partially finance the construction of the mini-grid project. The total cost of the project is estimated at ZAR 113 million (approximately US$7.1 million).
The project will be built on a turnkey basis by NESA Power, which has already entered into an engineering, procurement and supply (EPC) contract alongside the SPV. As previously announced, the project’s 1 MW/4 MWh VRFB will be supplied by CellCube, a. VRFB original equipment manufacturer, in which Bushveld holds an indirect 25.25% interest. Vametco has sold 26 mtV to produce the electrolyte required for the VRFB, which is currently being converted to electrolyte overseas. Site preparation for construction began in Q1 2022. The project is now fully funded and expected to be completed in H1 2023.
Fortune Mojapelo, CEO of Bushveld Minerals, says: “We are delighted to have secured the necessary funding for the EPC hybrid mini-grid at Vametco. The project is the first of its kind in South Africa and will serve as a VRFB reference site in South Africa for the mining industry, utilities and other users. This VRFB minigrid project is a useful proof of concept for the greater technological qualities of long-life VRFB systems when used in conjunction with renewable energy sources. At a fundamental level, the project also perfectly demonstrates the sustainable use of vanadium, positioning it as a key metal in the green energy transition.
“It is also very encouraging to note that most of the capital invested in the mini-grid project has come from sources outside of Bushveld Minerals. This not only proves the attractiveness of the business case for long-term energy storage using vanadium, but also shows the interest of investors in the market to implement VRFB technology.
“We expect to see increased demand for projects combining solar PV and VRFB technology in the future, especially in regions with similar challenges to South Africa.”
Percy Ying, director of NESA Investment Holdings, said:
“NESA Investment Holdings and NESA Power Group are proud to be working with Bushveld Energy to develop its flagship renewable energy project for Bushveld Minerals’ Vametco mine. In addition to generating long-term positive benefits for the mine, the project will also be one of the first renewable energy projects in South Africa to use vanadium battery storage technology and demonstrate its commercial viability on a large scale. Understanding the value that Vanadium Redox Flow Batteries have for South Africa, we are confident that the project, once completed, will catalyze the further deployment of large-scale vanadium battery energy storage systems in South Africa and help secure the country’s energy future.
Justin Schmidt, Head of Renewable Energy at ABSA Relationship Banking, commented:
“We are thrilled to be a part of this project and relationship. The project is further proof that the ever-evolving solar panel market is growing. In addition, it also highlights the important role of regulatory reform in enabling energy availability for businesses.
The project is part of Bushveld’s strategy to demonstrate the greater technological qualities of long-life VRFB systems when used in conjunction with renewable energy sources. The hybrid mini-grid project will provide approximately 10.7% of Vametco’s electricity and at the same time demonstrate the technical and commercial viability of hybrid mini-grids using solar PV and VRFB technology at grid parity. Vametco signed a 25-year power purchase agreement. In addition, Vametco sold the vanadium for the battery at normal market prices. The project will help Bushveld mining and processing operations to reduce their carbon footprint. WHAT2 emissions will be reduced by more than 8,000 metric tons per year and more than 200,000 tons of CO2 during the life of the project. This will help Bushveld Minerals meet its environmental, social and governance (ESG) objectives and contribute to South Africa’s national climate targets.
Bushveld Energy has begun developing its own options with up to 120 MW of PV and 180 MWh of storage within the Bushveld Minerals Group. NESA and Bushveld Energy expect to work together on future projects and NESA has been granted a right of first refusal to fund any equity in captive options not exercised by Bushveld Energy or its affiliates. As part of a wider, long-term ESG strategy, these initiatives will also reduce the group’s reliance on the Eskom grid, help limit rising energy costs and reduce the carbon footprint of its vanadium production. The mini-grid will also use locally mined and recovered vanadium, demonstrating how VRFB energy solutions can deliver more local value to South Africa than any other storage technology, ensuring South Africa’s equitable energy transition. The Vametco project will be one of Africa’s first solar mini-grid projects with long-term storage, funded as an off-balance sheet independent power producer, and will deploy one of the continent’s largest flow batteries.
Image courtesy of Bushveld Energy
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