VRB Power Systems VRB-ESS for Sorne Hill "Has a Strong Economic Case"

VRB Power Systems VRB-ESS for Sorne Hill "Has a Strong Economic Case"

VRB Power Systems (TSX-V: VRB ) announced that the Vanadium Redox Battery Energy Storage System (VRB-ESS™) being sold to Tapbury Management Limited ("Tapbury"), for Phase II of the Sorne Hill Wind Farm in County Donegal, Ireland ("Sorne Hill") has been increased in size from a 1.5MW x 8hr system to a 2MW x 6hr system.

The value of this contract to VRB Power has increased from US$6.3 million to approximately US$9.4 million. The agreement remains subject to execution of final contracts between Tapbury and VRB Power.

The re-sizing of this system follows completion of the independent feasibility study , by Grant Thorton, on the implementation of the VRB-ESS at Sorne Hill jointly commissioned by Sustainable Energy Ireland (SEI) and Tapbury. This study validates a number of the key revenue streams that will be generated by the VRB-ESS. It also concludes that the optimum size of the system is 2MW of power with 6 hours of storage and the ability to provide 3MW of pulse power for 10 minute periods every hour in order to deal with short term volatility in wind generation.

"We are delighted with the findings of this study," stated John Ward, Director of Tapbury. "The report provides technical and economic validation for a number of the key revenue streams that we had previously identified for the planned implementation of the VRB-ESS at Sorne Hill. The increase in the size of the system enables us to maximize these revenue streams and, when combined with additional market based payments, shown in the Grant Thornton report included in the study, provides a strong economic case for this purchase. In particular, the study demonstrates the potential for purchasers of VRB Energy Storage Systems in the Irish market to achieve a very healthy IRR of 17.5% on their investment."

Thornton concluded that in their opinion, based upon the work they have performed and subject to any variations to key assumptions that might prove necessary, the VRB-ESS investment at Sorne Hill Wind Farm would generate a Project internal rate of return ("IRR") of 11.7% (pre-tax). However, given an appropriately structured investment which utilizes commercially viable levels of gearing, the VRB-ESS at Sorne Hill Wind Farm would generate an IRR of c.17.5% (post tax) for an equity investor.

"This study demonstrates the economic viability of our systems for wind farms such as Sorne Hill," stated Tim Hennessy, CEO of VRB Power Systems. "This is largely due to our ability to enable wind powered generation to match many of the characteristics of conventional 'base load and peaking plant', thereby allowing wind power to be dispatched in a similar way to conventional generation . The report also highlights the need for storage in Ireland to enable the successful roll-out of wind generation from the current installed base of approx. 800MW up to and beyond the 3,000MW currently contracted or proposed, and to deal with the intermittency and constraint issues already being experienced. It is estimated that at least 700MW of storage may be required across Ireland. This sale will provide us with a "blue-print" to execute on similar opportunities in Ireland and worldwide," concluded Hennessy.

The VRB Energy Storage System (VRB-ESS) is an electrical energy storage system based on the patented vanadium-based redox regenerative fuel cell that converts chemical energy into electrical energy. Energy is stored chemically in different ionic forms of vanadium in a dilute sulfuric acid electrolyte. The electrolyte is pumped from separate plastic storage tanks into flow cells across a proton exchange membrane (PEM) where one form of electrolyte is electrochemically oxidized and the other is electrochemically reduced. This creates a current that is collected by electrodes and made available to an external circuit. The reaction is reversible allowing the battery to be charged, discharged and recharged.

The study goes into great detail on how the system works and how it is used to mitigate power imbalance, smoothing power output and providing an arbitrage service. A previous post describes VRB flow batteries, the companies that produce them and their use in various applications.

Headquartered in Vancouver, Canada, VRB Power Systems Inc. is an energy storage technology developer which is marketing, selling and manufacturing products utilizing the patented VRB Energy Storage System ("VRB-ESS™").

The VRB-ESS is well suited for a variety of applications. Enabling the provision of "firm" capacity from intermittent renewable generation such as wind and solar; more cost effective and efficient generation of electricity in remote areas; capital deferral for utilities; and load leveling (peak shaving) applications.