Economic Assessment of a 5MW/30MWh Vanadium Redox Flow Battery Energy Storage Project with an IRR of 9.39%
Classification：Industrial News
- Author：ZH Energy
- Release time：Apr-18-2025
【 Summary 】ZH Energy's NeLCOS? Energy Storage Calculator provides free cost-benefit ratio analysis for energy storage customers and investors
A new material chemical enterprise in Henan is currently developing vanadium electrolyte and plans to configure a vanadium redox flow battery energy storage system. This system will not only serve as a practical platform for the performance study of the electrolyte but also be used simultaneously for backup power supply and peak-valley arbitrage operations. To achieve precise planning, the project employs the NeLCOS? energy storage calculator from ZH Energy to analyze the technical suitability and economic return path of the project.
The enterprise's electricity consumption type is "two-part tariff - commercial and industrial electricity," with a voltage level of 110 kV. According to the electricity price for agency electricity purchase in Henan Province in January 2025:
Based on the above electricity price, the peak-valley electricity price difference reaches 0.728 yuan per kWh. The peak electricity price during the months of January, February, June, July, August, and December is 20% higher than the peak price, resulting in a peak-valley price difference of 0.925 yuan per kWh, which provides a certain space for peak-valley arbitrage. The time-of-use electricity price is shown in the figure below:
According to the above electricity consumption analysis, the peak period lasts for 8 hours, from 16:00 to 24:00. There are 7 hours of valley period in the early morning, and the rest of the time is the flat period. Since the DC efficiency of the energy storage system is 80%, the 7-hour valley period at night should be fully utilized for charging. The discharge time is 7 × 80% = 5.6 hours, so a 6-hour energy storage system can be selected.
In summary, a 5MW/30MWh energy storage system can be selected for this project. The project is funded by the owner with 20% of the capital, and the remaining 80% is financed through loans. The loans are repaid in equal installments with an annual interest rate of 3.5% over a repayment period of 20 years. The equipment and civil construction costs are depreciated linearly over 20 years. The value-added tax rate for equipment is 13%, and the income tax rate is 25%. The annual operation and maintenance cost is calculated as 0.5% of the equipment cost, and the shutdown maintenance rate is 3%. The project does not consider the owner's profit-sharing ratio or design and civil construction costs, but it does take into account that the recycling rate of the electrolyte of the vanadium redox flow battery system can reach 70% after 20 years of service life, and the funds from recycling are included in the revenue of the last year.
Based on the above operational analysis, the economic data of the project obtained through the NeLCOS? energy storage calculator from ZH Energy are as follows: The equipment investment of the project is approximately 67.56 million yuan, with a total installed power of 5MW and an installed capacity of 30MWh. The annual discharge volume is 10.62 million kWh, and the system is designed for a service life of 20 years. The investment plan is 20% equity capital and 80% loans. The internal rate of return (IRR) is 9.39%, and the capital investment is expected to be recovered in 8.55 years.
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