South Africa’s Vanadium Opportunity: Localising the Energy Transition

The study, undertaken by Customized Energy Solutions (CES), highlights the rapid growth expected in the VRFB market, driven by the global shift toward long-duration energy storage (LDES) to support renewable energy integration and grid stability. Installed VRFB capacity is projected to grow tenfold by 2030, from 4 GWh to 40 GWh, with vanadium demand rising from 5% of global consumption in 2024 to 27% by 2030.

South Africa is well-positioned to benefit from this growth. The country holds some of the world’s richest high-grade vanadium reserves (exceeding 1.5% V₂O₅) and produced 8% of global supply in 2024. With vanadium now designated as a “moderate-to-high” critical mineral under South Africa’s Critical Minerals and Metals Strategy, the opportunity to build a competitive downstream industry is clear.

VRFBs offer a compelling combination of safety, longevity, and recyclability. Electrolytes are nearly 100% recoverable, enabling circular business models such as leasing and buy-back schemes. Capital expenditure is expected to decline from $380/kWh in 2025 to $230/kWh by 2030, reaching cost parity with lithium iron phosphate (LFP) batteries for 8-hour applications.

However, the study cautions that the global VRFB value chain is highly concentrated, with 93–95% of electrolyte production capacity located in China. To unlock industrial value, South Africa must act decisively to localise the VRFB ecosystem, from mining and beneficiation to manufacturing and export.

Recommended interventions include:

• Designating Energy Storage Special Economic Zones (SEZs) for battery manufacturing.

• Introducing tax incentives and grants for vanadium beneficiation and component production.

• Supporting public procurement of long-duration storage technologies.

• Strengthening cross-departmental collaboration between DMRE, DTIC, Energy, and Treasury.

This work aligns with SAREM’s vision to localise renewable energy value chains, create sustainable jobs, and build industrial resilience. The LSF continues to deploy technical expertise and convene stakeholders to unlock localisation opportunities where South Africa has a strong right to win.