The non-binding MoU outlines the principal terms under which the JV, to be owned 50:50 by Invinity and US Vanadium, will combine Invinity’s flow battery expertise with US Vanadium’s ability to supply high-purity vanadium and vanadium electrolyte at its Arkansas facility. More details are set to be released as the partners progress towards a definitive agreement.

The news is the latest in a series of 2022 announcements that imply a positive outlook for VRFB. On the supply side, earlier this month Largo Clean Energy signed a non-binding memorandum of understanding with Ansaldo Green Tech to establish a collaboration for the purpose of the commercial deployment of Largo’s VCHARGE VRFB. Earlier this year, Largo also provided details on plans for Largo Physical Vanadium (LPV) – a vehicle set to offer potential investors direct exposure to vanadium. LPV would purchase and hold physical vanadium, amongst other things, for use in Largo’s VCHARGE batteries. Other announcements include Kibo Energy, a renewable energy-focused development company, signing a five-year agreement with Enerox (CellCube), to develop and deploy long-duration energy storage solutions (LDES) in Southern Africa and the final commissioning of the giant 100MW/400MWh Rongke Power system in Dalian, China.

On the demand side, government policies continue to suggest a supportive environment for energy storage growth. In the USA, the Inflation Reduction Act sets out US$30Bn of tax credits for states and electric utilities to adopt clean energy and energy storage. Meanwhile, in South Africa, President Ramaphosa recently outlined key plans to solve the country’s electricity crisis, including an acceleration of procurement of new capacity from renewables, gas, and battery storage, pledging to release a request for proposals for battery storage by September 2022.

Project Blue expects to see continued commercialisation of vanadium redox batteries in its base case. Our current projection is for >30%py growth to 2027, with demand to be driven by China. We think the future of VRFB commercialisation to be a somewhat binary story: it will happen, or it won’t. Our low case assumes the latter (owing to cost issues with electrolyte and/or lower-than-expected appetite for ESS) with some demand still assumed for R&D and pilot installations. In our high case, ESS installations occur at a higher-than-expected rate and/or VRFBs gain some market share over “competing” electrochemical technologies such as Li-ion.

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