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-scale 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 field 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-grade assets in South Africa, has been working hard over the past six years to finally bring the large-scale Vanadium Redox Flow Battery (“VRFB”) ) to South Africa and the African continent in general.
China is the largest producer of vanadium in the world, with 60% of the global supply of vanadium in 2020, and most of the vanadium comes from co-production. Russia is the second largest producer and South Africa the third largest, with 17% and 7% of supply in 2021. Bushveld Minerals is a vertically integrated primary vanadium producer. It is one of only three operational primary vanadium producers, owning 2 of the 4 operational primary vanadium processing facilities in the world. One of these facilities is the Vameco mine. Bushveld’s goal is to organically increase production to more than 8,400 mtVp.a. in the medium term.
Bushveld Minerals Limited, through its 84% owned energy subsidiary Bushveld Energy Limited, has completed development and achieved 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 firm, have signed a shareholder agreement as a strategic equity partner in the implementation and financing of the project, with the project housed in a special purpose vehicle (SPV). The statement added:
NESA provided 60% of the capital, while Bushveld Energy provided 40%. Bushveld Energy will recognize a development fee of ZAR 5.6 million as project revenue upon financial close. ABSA Bank South Africa has approved a ZAR 64 million (approximately US$4.1 million) loan to finance part of the construction of the mini-grid project. The total value of the project is estimated at ZAR 113 million (approximately USD 7.1 million).
The project will be built on a turnkey basis by NESA Power, which has already signed an Engineering, Procurement and Supply (EPC) Agreement with SPV. Original equipment manufacturer VRFB in which Bushveld indirectly owns a 25.25% stake. Vametco has sold 26 mtV for the production of electrolyte required for VRFB which is currently being converted into electrolyte abroad. Site preparation for construction began in the first quarter of 2022. The project is now fully funded and is expected to be completed in the first half of 2023.
Fortune Mojapelo, CEO of Bushveld Minerals, says: “We are delighted to have secured the necessary funding for EPC hybrid mini-grids at Vametco. This project is the first of its kind in South Africa and will serve as the reference VRFB location in South Africa for the mining industry, utilities and other users. This VRFB mini-grid project is a useful proof-of-concept of the higher technological qualities of long-term VRFB systems when used in combination with renewable energy. At a fundamental level, the project also perfectly demonstrates the sustainable use of vanadium and positions 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 investor interest in the market for the introduction of VRFB technology.
“In the future, we expect increased demand for projects that combine solar PV and VRFB technology, especially in regions with similar challenges as South Africa.”
Percy Ying, director of NESA Investment Holdings, commented:
“NESA Investment Holdings and NESA Power Group are proud to partner with Bushveld Energy to develop their 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 at 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 contribute to securing the country’s energy future.”
Justin Schmidt, Head of Renewable Energy at ABSA Relationship Banking, commented:
“We are excited to be a part of this project and relationship. The project is another proof that the solar energy market is constantly growing. In addition, it also highlights the important role that regulatory reform plays in order to enable the availability of energy for business.”
The project is part of Bushveld’s strategy to demonstrate the greater technological qualities of long-term VRFB systems when used in conjunction with renewable energy. The hybrid mini-grid project will provide approximately 10.7% of Vametco’s electricity, while demonstrating the technical and commercial viability of hybrid mini-grids using solar PV and VRFB technology at grid parity. Vametco signed a 25-year electricity purchase agreement. In addition, Vametco sold vanadium for the battery at prevailing market prices. The project will help Bushveld’s mining and processing activities to reduce their carbon footprint. CO2 emissions will be reduced by more than 8,000 metric tons per year and over 200,000 tons of CO2 during the duration 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 commenced development of captive options with up to 120 MW of PV and 180 MWh of storage within the Bushveld Minerals Group. NESA and Bushveld Energy expect to collaborate on future projects, and NESA has been granted a right of first refusal to finance any equity in restricted options not taken by Bushveld Energy or its subsidiaries. As part of a wider, long-term ESG strategy, these initiatives will also reduce the Group’s reliance on the Eskom grid, help limit increases in energy costs and reduce the carbon footprint of its vanadium production. The mini-grid will also use locally mined and refined vanadium, demonstrating how VRFB energy solutions can provide greater local value for South Africa than any other storage technology and thus ensure a just energy transition in South Africa. The Vametco project will be one of Africa’s first long-term storage solar mini-grid projects to be financed as an off-balance sheet independent power producer and use one of the continent’s largest flow batteries.
Image courtesy of Bushveld Energy
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