Editor's note: This blog was first published on Febrary 25, 2019.
I’m continually amazed by the energy industry’s efforts to accomplish new levels of efficiency with inventive, out-of-the-box thinking. New power configurations, finance models, and technological advances support the industry’s transition to more digitized, decentralized systems.
One such innovation is the recent development of a new business model that reduces the upfront cost of flow battery deployment while improving ROI. And this new model hinges upon an intriguing detail: the battery company rents the electrolyte to the customer.
As you’re likely aware, in flow batteries, a liquid electrolyte moves through a chamber with positive and negative electrodes separated by a membrane. The ion exchange that takes place generates electricity. Vanadium is often used in the electrolyte because of its ability to remain in solution in four different oxidation states. The metal also retains its value and can be 100% recovered after years of use.
The new electrolyte rental business model will capitalize on this quality, effectively allowing companies to rent the element to a customer, receive payment for its use, and later extract the vanadium to rent or sell for use in another project.
Flow battery maker Avalon Battery is pioneering the business model in a grid-independent project for Sandbar Solar’s headquarters in Santa Cruz, CA, with a system that enables the facility to operate exclusively on solar power. The power configuration is bound together with microgrid controls from Ageto Energy and, under a contractual agreement, Sandbar Solar rents the electrolytes for the flow battery.
“A 10-year vanadium rental arrangement eliminates about one-third of the upfront capital expense of a flow battery purchase,” Avalon Battery president and chief product officer Matt Harper told Greentech Media.
Experts agree that this innovative business model could prove a game-changer for distributed energy. By lowering the price of vanadium flow batteries, it will make them increasingly competitive with lithium and likely increase the number of deployments in the coming years.
What are your impressions of this business model? What effect do you think that it will have on the energy storage market?