The rapid rise of renewable energy and cleantech markets is causing many industrial companies to think a little differently about their business. Many are finding more energy efficient ways of producing their products, while others are finding applications for their products in clean technologies.
But few companies have made as drastic a shift in their business focus as American Vanadium. Based in Vancouver, British Columbia, Canada, what started as a simple mining company is evolving into a clean energy storage company with an entirely unique approach and business model.
It started with the exploration of a vanadium deposit in Nevada. The site, known as Gibellini Hill, was known for many years by mining companies, according to Ron MacDonald, American Vanadium’s executive chairman. “A bunch of big companies had looked at it and decided it wasn’t worth anything to them,” he told me in an interview.
That was because the deposit was entirely unlike any other vanadium deposits. Used largely in the steel industry to strengthen alloys for defense, construction, and aerospace applications, vanadium is typically found in hard rock deposits in iron, uranium, and other ores. “This one didn’t express that way; it was in shale. No one knew how to extract it from shale,” said MacDonald. “In most cases you can go up, take it and crush it with your hand and see the vanadium.”
Lab testing confirmed that the vanadium could be extracted using heap leaching, a process commonly used with precious metals, as well as copper and uranium. Feasibility studies were conducted, and the mine will be ready for production in 2014.
MacDonald told me the company could easily sell the vanadium to the steel industry and realize a 44 percent ROI, which, according to Mark Baggio, the company’s advisor for external markets, is comparable to a good gold deposit. But unlike other vanadium deposits, Gibellini Hill is uncommonly pure and free of contaminants. That opens up opportunities to sell to the U.S. military, where high levels of purity are needed for what MacDonald calls “cannot-fail” applications.
But the company sees biggest opportunity in another market: energy storage systems. Vanadium flow batteries are an established technology that has been underutilized for years due to the high price of vanadium and the batteries’ large footprint. But vanadium flow batteries have a few key technological advantages that make them appealing:
- Vanadium batteries do not degrade over time, unlike lithium ion and other technologies.
- They can remain fully discharged for long periods of time without ill effects.
- Storage capacity can be increased simply by adding more or larger storage tanks of vanadium.
- Storage life of a vanadium flow battery is longer than nearly any other electric battery technology, and is often said to be unlimited.
- The vanadium can be reclaimed from the battery and reused in another battery or any other application at almost any time.
The latter benefit is part of the inspiration behind the American Vanadium’s unique business model. The company intends to lease – rather than sell – the element to battery manufacturers. This, MacDonald insisted, will protect the manufacturer from price spikes. And he genuinely believes the price of vanadium is going to spike in the future as a direct result of demand outpacing supply.
Capitalizing on the Next Industrial Revolution
MacDonald claims there’s an industrial revolution happening in energy storage. In particular, China recently announced that it intends to build out storage capacity equal to 15 percent of renewable energy production by 2020, with a “hard target” of 5 percent of total production. MacDonald claimed that 45 percent of that capacity will be in battery technologies.
MacDonald called this an “earth shattering” announcement. “If only 5 percent of the storage build out in China used vanadium flow batteries, even if all of the potential [vanadium] mines are in production by 2020, there’d be a 50 percent shortage,” he said.
As we’ve often discussed here at IMT Green & Clean Journal, energy storage is critical to a renewable energy future, particularly as it applies to peak shaving and load leveling. MacDonald foresees a massive market for vanadium flow batteries as the U.S. works to update the grid.
So much so that the company has decided that, in addition to mining the metal and leasing it to battery manufacturers, it will also sell the batteries in the U.S. through a partnership with German manufacturer Gildemeister, which makes the CellCube vanadium reflox battery.
But here again, the company has found a way to optimize its business model for maximum benefit. Grid and industrial applications require the use of the battery only occasionally. So American Vanadium will build the batteries to spec for the customer, but retain ownership, renting out the power to other businesses while it isn’t in use. A model like this keeps the costs down for all parties, and maximizes income for American Vanadium.
Micro grids, such as the kind found in the pacific islands, are another area where MacDonald sees tremendous potential for vanadium batteries to as an alternative to diesel generator backups. Even the mining industry can benefit from the combination of renewable energy and energy storage technologies. MacDonald cited Ron Espell, the company’s vice president of environment, in saying there’s “at least 60 projects in the mining sector that will never be developed unless someone can build a micro grid on site. You can’t rely on diesel for these because they are remote.”
Replacing diesel backups with vanadium batteries would also save lives, according to Baggio. He told me that the military suffers some of the biggest losses while conducting fuel runs to refill diesel generators. Vanadium batteries are an ideal replacement technology, he said, because, “The military is less concerned about cost than duration and durability.” He added that the batteries are non-toxic and safer to use in conflict zones. “The biggest component is water with some sulfuric acid. It doesn’t burn or explode.”
To date, Gildemeister has more than 30 installations worldwide, though none yet in the U.S. If American Vanadium can secure enough state-side sales, the company will take on yet another dimension – that of manufacturing job creator. “If we get 30 MW installed in the U.S. we will start a U.S. fabrication plant,” said MacDonald.
Practicing What They Preach
MacDonald and his company don’t just see “green” as a business opportunity to be exploited. The Gibellini site is set up to be “greenest mine on the planet,” according to MacDonald. For starters, the company built its own micro grid on-site using a mix of solar and wind energy, with, of course, vanadium flow battery backup.
The mining operation is less energy intensive and environmentally disruptive due the deposit’s proximity to the surface; very few deep drills are needed. MacDonald called the process “Fischer Price mining.” Baggio explained, “We are operating more like a quarry. We even put the rock back when we are done.”
The heap leach process is set up as a closed loop system at Gibellini Hill. The rock is placed on a leach pad which is then coated in hydrochloric acid. Once the leaching process is completed, the acid is reclaimed, cleaned and reused. Overall, the mine will use one tenth the amount of water of a traditional mine, and all of that water is being recaptured as well.
MacDonald said Gibellini Hill and some other sites in the area could provide up to a 20-year supply of vanadium. Once the shale supply has been exhausted, the company could continue to dig underground for additional, lower-grade vanadium. If and when the company does decide to abandon the site, there will still be a productive and functional micro grid and backup system to deal with.
What will they do with it? MacDonald speculated that they would likely keep generating power and sell it back to the grid.
Perhaps the company will then add yet another dimension to its growing and adaptive business model.