1. All vanadium flow battery: a potential long-term energy storage form
1.1. All vanadium flow battery is currently a highly mature liquid flow battery technology
Liquid flow battery is an electrochemical energy storage technology with great potential. The concept of liquid flow battery was first proposed by Japanese scientists Ashimura and Miyake in 1971. In 1974, NASA scientist L. H. Thaller constructed the world's first practical liquid flow battery model using FeCl2 and CrCl3 as positive and negative active substances. Unlike ordinary solid-state batteries, the positive and negative ions of a liquid flow battery are stored in an external storage tank in the form of an electrolyte solution, and the mutual conversion of electrical and chemical energy is achieved through reversible redox reactions of active substances in the positive and negative electrolyte solutions. Liquid flow batteries have relatively low energy density, but they have significant advantages in terms of service life, charging and discharging depth, system capacity, etc. Therefore, they are receiving increasing attention in the field of large-scale energy storage.
All vanadium flow battery is currently a mature and highly industrialized flow battery technology. According to the different active substances of electricity, liquid flow batteries can be divided into various technical routes, among which representative systems that have been commercially applied include all vanadium, iron chromium, zinc bromide, etc. From the perspective of technological maturity, all vanadium flow batteries are currently in the * position. They were founded by Professor Skyllas Kazacos and his team from the University of New South Wales in Australia in 1985. Institutions such as Sumitomo Electric in Japan, VRB in Canada, and Dalian Institute of Chemical Technology in China have been conducting industrial research since the 1990s. Currently, commercial projects with a capacity of tens to hundreds of MWh have been put into operation both domestically and internationally. In comparison, iron chromium flow batteries have problems such as hydrogen evolution reaction and insufficient electrochemical activity of chromium ions, while zinc bromide batteries have relatively limited monomer capacity and are currently in the engineering demonstration stage.
1.2. All vanadium flow batteries have advantages in safety, longevity, flexibility, and other aspects
1.2.1. Safety
Compared to lithium-ion batteries, all vanadium flow batteries have better safety. For lithium-ion batteries, once there is a short circuit or high operating temperature inside the battery, the electrolyte is prone to decomposition and gasification, which can lead to battery combustion or explosion, posing a major safety hazard. The electrolyte of all vanadium flow batteries is an acidic aqueous solution of vanadium ions, which operates at room temperature and pressure without the risk of thermal runaway and has inherent safety. According to empirical results, under theoretical SOC, even if the positive and negative electrolytes are directly mixed and the temperature rises from 32 ℃ to 70 ℃, the all vanadium flow battery system will not generate risks such as combustion and ignition. Therefore, for energy storage scenarios with dense personnel, large scale, and high safety requirements, all vanadium flow batteries are a safer and more stable technology.
The higher safety of all vanadium flow batteries enables them to adopt a more compact layout, thereby reducing land occupation at the project level. Compared to lithium-ion batteries, all vanadium flow batteries have a significant difference in individual energy density. For example, Dalian Rongke's 20 foot energy storage container product TPower has a storage capacity of 0.5 MWh, while the current mainstream lithium battery energy storage integrators' 20 foot container system generally has a storage capacity of over 3 MWh. However, for large-scale energy storage projects, lithium-ion battery energy storage systems need to meet stricter fire and safety standards, so a larger safety distance must be left in the layout of containers.
The "Design Standards for Electrochemical Energy Storage Power Stations (Draft for Soliciting Opinions)" released by the Ministry of Housing and Urban Rural Development in June 2022 clearly states that the distance between the long and short sides of lithium-ion battery prefabricated compartments should not be less than 3m. At the same time, lithium-ion battery equipment should be arranged in zones, and the rated energy of the energy storage system in outdoor battery prefabricated compartments (cabinets) should not exceed 50MWh. The distance between adjacent zones should not be less than 10m. For all vanadium flow batteries, The draft for soliciting opinions did not make corresponding provisions. The floor area of partially completed and under construction vanadium flow battery energy storage stations and lithium battery energy storage stations is significantly smaller than that of lithium battery energy storage stations in terms of these projects. Therefore, we believe that the inherent safety of all vanadium flow batteries can enable them to adopt a more compact layout, partially compensating for their disadvantage in energy density and saving land occupation for energy storage projects.
1.2.2. Long lifespan and low attenuation
The cycle times of all vanadium flow batteries are significantly better than that of lithium-ion batteries, and the capacity can be fully restored within the life cycle, with a high utilization rate of capacitance during the life cycle. On the one hand, all vanadium flow batteries use vanadium ions with different valence states as the active substance of the battery, and the reaction process only involves the valence state change of vanadium ions, without involving liquid-solid phase transition, and overcomes the problem of electrolyte cross contamination; On the other hand, the electrical materials of all vanadium flow batteries do not participate in electrochemical reactions during the charging and discharging process, and belong to inert electrical materials. Materials such as electrical materials and double plates have good stability and do not involve replacement; In addition, in response to the capacity attenuation problem caused by the imbalance of vanadium ion valence states caused by the migration and side reactions of electrolyte between positive and negative ions in all vanadium flow batteries, low-cost physical and chemical methods can generally be used to recover. Therefore, all vanadium flow batteries theoretically have a long cycle life, and from the empirical results of early projects, the advantages of long life of all vanadium flow batteries have also been fully verified.
For example, Sumitomo Electric implemented a 4MW/6MWh all vanadium flow battery system from 2005 to 2007 in conjunction with the wind farm, which underwent over 200000 charges and discharges over three years. The 5MW/10MWh all vanadium flow battery system, which was jointly operated by Dalian Rongke and Guodian Longyuan, has been in operation for more than 9 calendar years since its grid connection in December 2012, and its efficiency and capacity have not decreased. In comparison, the current cycle times of lithium iron phosphate batteries are only 5000 to 10000. If the issue of cell consistency in energy storage systems is considered, the cycle life at the system level is often lower, and the available capacity of lithium-ion batteries will also significantly decrease with the increase of cycle times. Therefore, we believe that from a full lifecycle perspective, all vanadium flow batteries have certain advantages.
1.2.3. Flexibility
The power unit and energy unit of all vanadium flow battery are independent of each other, and can be flexibly designed according to different application scenarios. A complete all vanadium flow battery energy storage system is mainly composed of power units (stack), energy units (electrolyte and electrolyte storage tank), electrolyte delivery units (pipeline, pump valve, sensor, etc.), battery management system, etc. The power unit determines the size of the system power, while the energy unit determines the size of the system energy storage capacity, which are independent of each other. Therefore, at the system design level, all vanadium flow battery energy storage can achieve separate power and capacity design, as well as customized energy storage duration according to needs. The electrolyte storage tank can be independently installed externally or integrated with the battery stack into an integrated container product, making the overall scheme design more flexible. From a cost perspective, for fixed power all vanadium flow battery energy storage systems, the longer the energy storage time, the lower the unit investment cost of the power unit, and thus the overall unit investment cost of the system. Therefore, all vanadium flow batteries are more suitable for medium to long term energy storage scenarios.
1.2.4. Rich and independently controllable resource reserves
Vanadium is one of the widely distributed trace elements on Earth, with relatively abundant reserves. According to the United States Geological Survey (USGS), the global vanadium reserves (all measured in vanadium metal equivalents) currently exceed 63 million tons. At the end of 2021, the exploitable resource reserves are approximately 24 million tons, and the global production for that year was approximately 110000 tons, of which about 90% is used in the steel industry in the form of vanadium alloys. At the current technological level, a 1GWh all vanadium flow battery requires less than 5000 tons of vanadium metal, and the vanadium electrolyte can be recycled for a long time. Therefore, overall, we believe that the global vanadium resource reserves can fully support the large-scale development of all vanadium flow batteries.
China is a major producer and consumer of vanadium, and vanadium resources are independently controllable. According to USGS estimates, the scale of vanadium reserves in China at the end of 2021 is approximately 9.5 million tons (calculated based on vanadium metal equivalent in this section), accounting for about 40% of global reserves. However, in terms of production, China's vanadium production reached 73000 tons in 2021, accounting for nearly two-thirds of global production. Therefore, regardless of whether it is from a reserve or production capacity perspective, China has strong control over vanadium resources. In comparison, in 2021, the global reserves of domestic lithium resources accounted for only 7%, while the production accounted for less than 15%. The lithium battery industry chain has a strong dependence on overseas mineral resources.
1.2.5. Green, environmentally friendly, and recyclable resources
All vanadium flow batteries do not involve pollution and emissions during operation, and the electrolyte can be recycled, making them a green and environmentally friendly form of energy storage. Vanadium in all vanadium flow batteries exists as ions in acidic aqueous solutions, rather than as oxides of vanadium. It has a certain degree of corrosiveness but is non-toxic, and operates in a closed manner during operation, with minimal harm to the environment and human health. In addition, from the perspective of the entire life cycle, the recovery and treatment of various materials in lithium-ion battery energy storage systems is more difficult after their lifespan expires. The vanadium electrolyte of all vanadium flow batteries can be recycled for a long time in the battery field or extracted for vanadium to enter other market areas such as steel and alloys. The treatment of key components of the stack, pipelines, valves, and pumps is also simpler and has no environmental burden, So it is superior to lithium batteries in terms of both recycling costs and pollution emissions. According to research from Ghent University, under the condition of 50% recovery of vanadium electrolyte, the environmental impact of all vanadium flow batteries on land acidification, human toxicity, fine particle formation, mineral resource consumption, fossil energy consumption, and other aspects is almost completely lower than that of lithium-ion batteries.
1.3. All vanadium flow batteries are mainly suitable for large-scale, long-term energy storage scenarios
With the increasing diversification of energy storage scenarios, the coexistence of multiple energy storage technologies will become a long-term development trend. At present, traditional thermal power installations still occupy the dominant position globally, with wind and photovoltaic power generation accounting for only about 10%. Therefore, energy storage mainly plays an auxiliary role in the power system to solve short-term and small-scale supply and demand imbalances. But in the long run, as new energy gradually becomes the mainstay of the power system, the application scenarios of energy storage will continue to expand, covering the power range from kW level user side scenarios to GW level power generation side and grid side scenarios, and the duration of energy storage will vary from second level, minute level, hour level to cross day and cross season scenarios. Considering the significant differences in energy storage requirements across different scenarios, we believe that it is unlikely that there will be a situation where one energy storage technology will "unify the world" in the future, but rather that multiple energy storage technologies will coexist to support the security and stability of the power system.
All vanadium flow batteries have broad development prospects in large-scale and long-term energy storage scenarios. As mentioned earlier, the main advantages of all vanadium flow batteries are safety, longevity, and flexibility. However, at the current technological level, there is still a certain gap in energy density, conversion efficiency, and initial investment compared to lithium batteries. Therefore, we believe that the application field of all vanadium flow batteries is mainly for large-scale, long-term energy storage scenarios. Compared to pumped storage, the site selection of all vanadium flow batteries is more flexible and the construction period is shorter; Compared to lithium battery energy storage, all vanadium flow batteries have significantly superior safety and can be deployed in densely populated urban scenarios. The unit investment cost significantly decreases with the prolongation of energy storage time.
2. The energy storage market has exploded, and the development of all vanadium flow batteries has accelerated
2.1. The global energy storage industry has entered a stage of large-scale development
The global energy transformation is accelerating, and the conditions for the large-scale development of the energy storage industry are ripe. On the one hand, according to IEA calculations, in order to achieve the goal of carbon neutrality by 2050, the proportion of renewable energy generation needs to increase from less than 30% in 2020 to over 60% in 2030, while it needs to reach nearly 90% by 2050. As volatile energy sources such as photovoltaic and wind power accelerate to replace traditional thermal power installations, the challenges faced by the power system are becoming increasingly prominent. On the other hand, with the advancement of technology and the expansion of production capacity, the cost of wind and photovoltaic power generation has significantly decreased in recent years. On the basis of grid side parity, the world is currently moving rapidly towards the direction of "new energy+energy storage" parity. At the same time, after preliminary exploration and practice, the positioning and business model of energy storage in the power system are becoming increasingly clear. Currently, the mechanism for market-oriented development of energy storage in developed regions such as the United States and Europe has been basically established, and the reform of the power system in emerging markets has continued to accelerate. The conditions for large-scale development of the energy storage industry have become mature.
Starting from 2021, the global energy storage industry has entered a stage of rapid development. According to BNEF statistics, the global newly added energy storage capacity in 2021 was 10GW/22GWh, more than doubling compared to 2020. As of the end of 2021, the cumulative global energy storage capacity was approximately 27GW/56GWh. Considering that the global cumulative wind/photovoltaic installed capacity has reached 837/942GW by the end of 2021, it is estimated that the proportion of energy storage in the global wind/photovoltaic installed capacity is only 1.5%. We believe that the rapid growth of the energy storage market is just beginning and the industry has broad prospects for development.
2.1.1. Domestic: The development models of various links are becoming increasingly clear, and large-scale project bidding is accelerating
The policy outlines the development prospects, and the development models of energy storage in various links are gradually becoming clear. At the end of February 2022, the National Development and Reform Commission and the Energy Administration officially issued the "Implementation Plan for the Development of New Energy Storage during the 14th Five Year Plan", further clarifying the goal of "by 2025, new energy storage will enter the stage of large-scale development from the early stage of commercialization and have the conditions for large-scale commercial application", and "by 2030, new energy storage will be fully commercialized and developed". In addition, this document has clearly deployed energy storage on the power generation side, grid side, and user side, and the development mode of energy storage in each link is gradually becoming clear.
In 2022, the domestic energy storage industry officially entered the fast lane of development. In 2021, energy storage policies have been intensively introduced at both the national and local levels, but the main focus is on the overall deployment level. The relevant supporting details are not yet perfect. Therefore, 2021 is the year of transition for the domestic energy storage industry from commercialization to large-scale development, and the actual scale of projects implemented is relatively limited. According to CNESA statistics, in 2021, China added 2.4GW/4.9GWh of new energy storage capacity, an increase of about 54% compared to the same period in 2020. Among them, 2.32GW of electrochemical energy storage capacity, an increase of nearly 49% compared to the same period last year.
In the first half of 2022, due to various factors such as the epidemic and rising prices of raw materials, the overall pace of domestic energy storage project construction is relatively slow. However, since the second quarter, bidding for domestic energy storage projects has been centralized. According to our incomplete statistics, after excluding projects that cannot obtain a specific bidding scale, the total bidding capacity for domestic energy storage in the first half of this year has reached over 8GW/22GWh. Among them, the total bidding volume in the second quarter exceeded 18GWh, The bidding scale has significantly increased compared to the first quarter. After observing and preparing in the first half of the year, we expect that the construction speed of domestic energy storage projects will increase from the second half of the year