Aim-listed Bushveld Minerals’ 84%-owned Bushveld Energy subsidiary has enabled the successful deployment of a vanadium electrolyte rental product in industrial-scale batteries developed and sold by Avalon Battery Corporation of Fremont, California.
Bushveld Energy and Avalon worked together to structure and design the rental product.
This included creating a financial model for the product and a set of legal agreements for the transaction.
The complexity stemmed from developing financial and nonfinancial terms acceptable to three different parties – a vanadium producer, a battery company and an electricity customer.
The structures and documentation created from this project are available to both Bushveld Energy and Avalon for use in future projects, making it easier and faster to execute vanadium electrolyte rentals in the future.
Avalon’s customer, Santa Cruz Westside Electric, trading as Sandbar Solar & Electric – a Santa Cruz, California-based installer of commercial, industrial and residential solar photovoltaic (PV) systems – recently installed a solar PV minigrid at its 11 500 ft2 facility.
Sandbar incorporated an energy storage system comprising three Avalon vanadium redox flow batteries for full independence from the electric grid.
Sandbar chose to rent the vanadium electrolyte component of the Avalon batteries from Avalon, rather than buy it outright, owing to the cost efficiencies of the Bushveld-Avalon rental structure.
Batteries that use vanadium electrolyte to store energy have an advantage over competing battery technologies as vanadium does not degrade; therefore, the performance of electrolyte batteries does not deteriorate with age.
Renting the electrolyte reduces capital costs, while a consistent performance reduces overall costs.
The rental structure is commercially apt for both battery manufacturers and vanadium producers and the residual value of the vanadium is key to making this structure economically efficient.
The majority of the challenges in implementing the product commercially were not financial but legal, including title ownership and risk allocation. Owing to the uniqueness of the product, it was also essential to draft a legal agreement that current and future customers would be amenable to.
“Renting electrolyte is only practical with vanadium because the metal does not degrade after its useful life – one more reason that vanadium is the preferred mineral for energy storage systems,” Bushveld Energy CEO Mikhail Nikomarov said in a statement issued on Monday.
“We are pleased to partner with Avalon for commercial deployment of a concept that has been in development for a while, but not successfully implemented. Now vanadium takes its place alongside gold, silver and platinum, as a metal that can be leased, opening up immense future opportunities for this model," he added.