Vanadium flow battery market could be worth around half a billion dollars by end of the decade, with UK Infrastructure Bank among the investors that predict a big future for the industry – however, China dominates global vanadium production and the mineral looks particularly vulnerable to price shocks
The market for vanadium flow batteries is set to grow substantially between now and the end of the decade. Estimates of the value of the vanadium flow battery market vary, but according to Allied Market Research it stood at $188.7 million in 2023 and will increase to $523.7 million by 2030, a compound annual growth rate of 15.8 per cent, a forecast that is sure to catch the eye of investors.
So what is vanadium, the key component of the batteries? Vanadium is a grey, highly abundant element that can be found in more than 60 different minerals on every continent. Some of the most established primary sources are found in China, South Africa and Brazil, though production in USA, Canada and Australia is increasing rapidly.
Vanadium is fantastic ingredient for batteries. To begin with, it doesn’t experience degradation and therefore it can effectively be cycled (that is, fully charged and discharged) indefinitely. This means it has a high throughput level, which refers to the total amount of energy that can be cycled through the battery. Another advantage is that it can exist in four stable ionic states when dissolved in a simple electrolyte. What’s the significance of this? It means the same electrolyte can be used on both sides of the battery and consequently vanadium flow batteries have a simple design. In contrast, lithium-ion batteries, for example, make use of different elements on the positive and negative sides of the battery – this is especially problematic because the elements in question are often ‘conflict elements’ such as cobalt and nickel.
Vanadium flow investor market ‘developing more slowly’
The UK Infrastructure Bank (UKIB) is among the investors that believe there is a big future for vanadium flow batteries. Last year, UKIB became a cornerstone investor in UK-based vanadium flow battery manufacturer Invinity Energy Systems. Vanadium flow batteries’ huge potential in the area of long-duration energy storage proved particularly attractive for UKIB. As John Flint, UKIB’s CEO, said at the time of the investment: “The market of investors in more nascent longer-duration technologies like vanadium flow has developed more slowly than for lithium-ion batteries. Our cornerstone investment has helped Invinity to mobilise the additional private investment needed to scale their manufacturing, supporting the development of a promising new longer-duration technology.”
However, the vanadium flow battery industry faces one massive challenge in particular. Historically, vanadium’s primary use has been to strengthen steel used in construction, infrastructure and the motor industry. The issue is that China, as well as being the overwhelmingly dominant force in lithium-ion battery production, is also the biggest vanadium mining country in the world, by far, with a market share of 70 per cent (see chart below). China also dominates global vanadium processing, with a market share of more than 50 per cent.
Source: USGS 2024 / theoregongroup.com
The question is, to what extent can the world rely on China for vanadium supplies? The high geographical concentration of global supply means that vanadium is particularly vulnerable to supply shocks, trade restrictions and political instability. In addition, over the period January 2014 to March 2025, vanadium prices have demonstrated greater volatility than oil, for example (see chart below).
Source: mdpi.com
Furthermore, if the concentration of vanadium production in China was not already problematic enough for the flow battery industry, it also has to grapple with increased domestic demand for vanadium in China itself. Chinese rebar standards – that is, the specifications for steel reinforcing bars used in concrete construction – have, since last year, demanded increased vanadium intensity. This development, coupled with higher vanadium flow battery demand, means it is predicted that, from next year, there will be a domestic vanadium supply gap in China. This could mean that, without increases in vanadium production capacity, China could potentially become a net importer of vanadium from 2026.
Despite the tremendous potential of vanadium flow batteries, shortages of available vanadium could mean that this is an energy storage technology that could struggle to gain momentum in the short term at least.
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