I shared some analysis on vanadium yesterday. Resource Speculator readers read it months back. In April, I tipped what I believe are the two best vanadium stocks on the ASX. If vanadium prices keep going up as I expect, both stocks look primed to take off.
That’s what happened with cobalt stocks. I tipped the sector back in June 2016, when no-one cared about it. Readers who followed my buy advice walked away with profits of 138.6% and 75.8%.
Today, my advice is to avoid cobalt stocks. Vanadium offers far better potential.
If you don’t believe me, here’s what Robert Friedland had to say:
The billionaire mining guru shared his rare view on vanadium. The Northern Miner reported on 7 May:
‘“We think there’s a revolution coming in vanadium redox flow batteries,” [Friedland] says. “You’ll have to get into the mining business and produce ultra-pure vanadium electrolyte for those batteries on a massive scale.
‘We’re very deeply interested in how you store electrical energy in the grid.
‘The beauty of the vanadium redox battery is that you can charge and discharge it at the same time, something that can’t be done with a lithium battery. With a vanadium redox flow battery, you can put solar power and wind power into the battery, and you can put excess grid power into the battery at night, and at the same time you can have a stable output into the grid.”’
Robert Friedland, like myself, believes that vanadium redox batteries (VRBs) are the future. I’m not talking about in 20 years, either. VRBs are likely to be a game-changer over the next five to 10 years.
That forecast might seem farfetched. Today, the steel industry accounts for over 91% of vanadium consumption. It’s used mainly to strengthen steel. VRBs account for only 1% of vanadium demand today.
But that could easily change. VRB demand is set to skyrocket in the years ahead. Take a look at the chart below:
Source: Largo Resources
[Click to enlarge]
The blue line shows the conservative demand estimate for VRBs. The market should be worth US$200 million by 2020. That means it is set to double.
Sounds good? Think bigger…
VRB demand could hit US$400 million by 2020. That’s shown by the yellow line on the chart above. A few VRB projects are already in development. I expect more to come online. This is just the start of the story. And that’s why it’s worth doing your homework on this revolutionary battery.
Better than lithium ion?
University of New South Wales researchers invented VRB batteries in 1985. The battery’s technology, like most others, has developed over time. Today, the VRB is a revolutionary power-storage device. It uses a liquid electrolyte instead of electrolyte plates for storing energy. The former is a substance that produces an electrically conducting solution.
Take a look at the electrolyte plate circuit:
[Click to enlarge]
Each battery cell has two sets of plates. They are surrounded by an acid solution. That’s the electrolyte. When electricity is drawn from a charged cell, the current flow causes a chemical reaction to occur. That’s what charges the battery…until it runs out of solution.
The vanadium battery is a bit different…
It’s a liquid-storage system. It consists of two tanks full of liquid electrolytes:
Source: Extreme Tech
[Click to enlarge]
Remember, the energy is stored in the electrolyte liquid tanks. Increasing capacity is simple — just add more fluid to the tank. The two liquid tanks sit there until needed. When pumped into a power reactor, the two solutions flow adjacent to each other on the outer sides of the battery. That generates a charge by moving electrons back and forth.
And VRBs use up to 50% vanadium.
The lithium-ion battery only uses 4% lithium. That’s a big difference.
The future for vanadium looks good. And while it won’t happen overnight, one day, vanadium batteries could replace lead-acid and lithium-ion (li-ion) batteries. That’s the small end of the market, mind you. The big picture is that they could store power from alternative energy (wind, wave and solar) sources.
I believe that could happen within the next five to 10 years.
Battery costs are falling
Vanadium redox batteries have two main advantages:
First, they offer seemingly unlimited energy capacity…just use larger electrolyte-storage tanks. That could be a game-changer for baseload power energy sources. Baseload power sources are the backbone of society. They are used to deliver power to billions of people around the world. In other words, coal and uranium might not be the future. With the ability to store an almost unlimited capacity, an alternative energy future becomes realistic.
That’s good news. But it gets better. That’s because the vanadium battery is safe.
VRBs can be completely discharged for long periods without causing problems. And if the electrolytes accidentally mix, the VRB suffers no permanent damage. That’s because vanadium electrolytes are a water-based solution. That makes the battery environmentally friendly and non-flammable.
Li-ion batteries may be the talk of the town today. But that may not be the case in five years…or even in a few months if vanadium prices keep surging, as I covered yesterday.
Remember, li-ion batteries simply aren’t suitable to power baseload energy sources. Li-ion batteries have a short duration and discharge run-time cycle. They start to degrade after a few hundred discharge cycles. Studies show they run for 1,000 cycles at most. That’s why the battery overheats and loses power over time.
Vanadium batteries are far better. They can operate for more than 10,000 cycles. They also maintain 90% of their capacity over 20 years. That lowers the cost of ownership.
Take a look at the difference below:
[Click to enlarge]
Vanadium batteries can scale up with decreasing unit storage costs. Remember, just increase the size of the storage tanks. That’s impossible with the lithium-ion battery. You just can’t do it. That’s because unit costs increase when sizing up. The entire battery needs to be replaced or upgraded.
VRBs are also a fraction of the price per kilowatt-hour (kWh) to store energy. Normal batteries cost about 30 cents per kWh. A vanadium battery costs about five cents per kWh. Those numbers aren’t baseless. UniEnergy Technologies — a megawatt-scale energy storage solutions provider — did the research.
There’s a lot to like about VRBs. They are non-flammable, environmentally friendly, and maintain 90% of their capacity over 20 years. I can’t say the same about li-ion batteries.
I believe it’s only a matter of time before the market catches onto the story. Vanadium prices are already surging. That’s why now is a great time to invest in the best vanadium stocks. Don’t wait for them to take off. The big money is made by getting in early.
To find all the details and full analysis of my two favourite vanadium stocks, start here.
Editor, Markets & Money