Can Project Lumina’s Vanadium Flow Batteries Disrupt Australia’s Energy Storage Market?

• Project Lumina’s levelised cost of storage (LCOS) improved to A$214/MWh for 8-hour duration
• Vanadium flow battery system now competitive with lithium-ion alternatives
• Modular 15 MW arrays designed for scalability and faster deployment
• Active pursuit of utility-scale projects across five Australian states
• Funding strategies include debt, equity, and potential government involvement

Project Lumina Advances with Cost Improvements

Australian Vanadium Limited (ASX: AVL) has announced significant progress on Project Lumina, its utility-scale vanadium flow battery energy storage system (VFB BESS), through its wholly owned subsidiary VSUN Energy. The project’s levelised cost of storage (LCOS) has been refined to A$214 per megawatt-hour (± 30%) for an 8-hour storage duration, down from an earlier estimate of A$251/MWh. This improvement places Project Lumina’s vanadium-based solution firmly in competition with lithium-ion battery systems currently dominating the market.

Early contractor involvement with engineering firms GenusPlus and Sedgman, alongside Austrian VFB manufacturer CellCube Energy Storage GmbH, has driven design and costing advances. The modular design employs 15 MW arrays, allowing flexible scaling and simpler future expansions by adding electrolyte storage capacity. This modularity supports faster deployment and reduced capital and logistics costs, while maximising local Australian content.

Strategic Positioning in Australia’s Energy Storage Landscape

VSUN Energy is actively targeting utility-scale projects across five Australian states, aligning with government policies promoting long-duration energy storage, vanadium mining, and domestic processing of critical minerals. CEO Graham Arvidson highlighted that the Australian energy sector is increasingly recognising vanadium flow batteries as a preferred technology for projects requiring eight hours or more of storage duration.

Project Lumina is on track for detailed design completion by Q3 2025, coinciding with accelerating demand for long-duration storage solutions. The project’s LCOS assumptions are based on a vanadium pentoxide (V2O5) price of US$10 per pound, indicating that current vanadium pricing supports competitiveness without deterring upstream supply incentives.

Funding and Future Outlook

AVL is exploring a mix of debt and equity funding options, including potential strategic and cornerstone investors, as well as involvement from Australian government agencies. The company is also evaluating a Build-Own-Operate (BOO) business model for VSUN Energy to accelerate deployment and operational control of VFB projects.

Project Lumina’s vertical integration, from vanadium mining at the Australian Vanadium Project through electrolyte production to energy storage deployment, positions AVL as a potentially globally competitive supplier. This integrated approach supports Australia’s National Battery Strategy and the broader Future Made in Australia agenda, aiming to secure a resilient domestic battery supply chain.

With a growing pipeline of projects, including a proposed 500 MWh VFB BESS in Kalgoorlie, Western Australia, and larger opportunities emerging on the east coast, AVL is poised to capitalize on shifting market dynamics that favour long-duration storage technologies.

Bottom Line?

As Project Lumina moves closer to investment readiness, AVL’s vanadium flow battery technology could reshape Australia’s long-duration energy storage landscape.

Questions in the middle?

• How will AVL secure funding and what role will government agencies play?
• Can vanadium flow batteries maintain cost competitiveness amid fluctuating vanadium prices?
• What is the timeline for commercial deployment of Project Lumina’s first utility-scale installations?