Bushveld Minerals, a vanadium company, expects a change in the cap on electricity generation outside Eskom to give its energy business a welcome boost.
Bushveld, which is traded on London’s Alternative Investment Market (AIM), is also positioning itself to become a leading source of vanadium electrolytes, which are used to make long-life, long-duration batteries that can be used by power utilities and energy-intensive companies.
Bushveld, which owns the Vametco vanadium mine near Brits, is also rolling out a mini-grid at the site, using a vanadium redox flow battery to store and then supply 1MW of the 12MW the operation needs.
However, if energy minister Jeff Radebe’s highly anticipated release of the Integrated Resources Plan, which maps out SA’s energy mix, raises the cap on small-scale generation to 10MW from 1MW, then the size of the grid could be expanded, CEO Fortune Mojapelo said in an interview on Tuesday.
Currently, any power generation project outside Eskom that is larger than 1MW needs ministerial approval after passing through Eskom and the National Energy Regulator of SA (Nersa). This threshold is anticipated to be raised to 10MW.
"By revising the cap it could unleash significant investment into private electricity generation capacity," Mojapelo said.
But any interest coming from energy-intensive users that would be financially positioned to buy a vanadium battery represents just a small portion of the potential business Bushveld is pursuing, with state-owned power utilities a more important target, Mojapelo said.
"The energy markets are very structural markets and utilities play a central role in that. If you want to participate in energy in any meaningful way, you need to get involved in utilities," he said.
Around the world, just 8% of batteries are used in renewable energy schemes and the balance in large power utilities.
The first trial of the vanadium battery is with Eskom, which is testing a number of energy storage technologies at its Rosherville research, testing and development site near Johannesburg. Eskom wants to procure up to 1,400 megawatt hours (MWh) in battery energy storage. Bushveld will participate in the tender, due to be released "imminently".
In an effort to lower the cost of these units, which look like shipping containers, Bushveld is developing a model to rent the vanadium electrolyte solution that is core to the functioning of the battery.
As part of this strategy, Bushveld is building a plant in East London to produce enough vanadium electrolytes to hold 200MWh annually from early 2020 in a $10m project.
To put this in context, said Peter Oldacre, Bushveld Energy’s head of origination and investment, this would be the equivalent of 8-million litres of electrolytes and would represent 50MW of power. This would put Bushveld in the top five of global vanadium electrolyte producers and its plans to ramp up to 1,000MWh of capacity in East London would push it to the top, Mojapelo said.
To take the value addition of vanadium to the next step would be orders from Eskom and other big users that would justify the construction of the batteries in SA, with an estimated 70% of local content, he said.
Bushveld would need critical mass in orders of about 50MWh a year. "You need a solid pipeline that’s sustainable and not just a single order from Eskom. But if we get 10MW with four or five hours of storage then you have a business case," Mojapelo said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.