Redflow can’t compete with lithium batteries on price in home market

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Flow battery storage manufacturer Redflow abandons bulk home battery market due to price issues, to focus on bigger installations in commercial, industrial and off-grid sector.

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Australian battery storage manufacturer Redflow has conceded that it will be unable to compete with lithium-based battery storage products in the mass consumer market, even though it insists it will have a niche presence because of the quality and reliability of its zinc-bromine flow battery.

The Brisbane-based company, which is listed on the ASX, made the admission in a major strategic review released on Monday that includes the shift of its manufacturing base away from Mexico and to south-east Asia, and a shift in its major market to the industrial, off-grid and telecommunications market.

The problems facing Redflow in the homeowner market have been widely anticipated since Tesla revealed an effective 50 per cent drop in the cost of lithium-ion battery storage with the release of its Powerwall 2 battery late last year. Other battery storage manufacturers have since followed suit with major price falls.

redflow-launch

Redflow says its ZCell flow batteries, which use a different chemistry, offer deeper depths of discharge and are longer lasting than its lithium-based rivals, but admits it won’t be able to match them on price.

“Redflow batteries are more expensive than commercially mature and volume-produced lithium-based batteries,” it says in a statement.

“Despite this price differential, Redflow’s ZCell battery is achieving success with early-adopter and technically sophisticated customers who are prepared to pay a higher purchase price for an energy storage system they identify as technically superior.

“The review anticipates that this may not translate into strong sustained sales growth in the mid and late majority residential market, due to the price-sensitivity of competitive, highly commoditised markets, which tend to prioritise a low purchase price over technical advantages, such as those offered by Zinc-Bromine flow batteries.”

As a result of this, the company, now led by Simon Hackett, the biggest shareholder, has decided to prioritise its sales and marketing effort to “mature” markets such as telecommunications, industrial, commercial, remote/off-grid power and ‘weak-grid’ market segments, where it expects to replace existing lead acid battery installations.

It says these markets, which require large arrays of battery storage than a household, fit the “sweet spot” of Redflow’s value proposition, and it notes that Asia alone has more than 2.8 million telecommunications tower sites. Redflow earlier this month recorded its largest ever sale to a company in the telecommunications sector.

This, and recent problems with the manufacturing the product, has caused Redflow to decide to shift its manufacturing base from the Mexican operations of Flex to a new site in south east Asia. It will also cut staffing in European and US markets to lower operating costs.

“Redflow’s opportunity in the telco/commercial/industrial sector is predicated on replacing short-lifetime Lead-Acid batteries with long-life ZBM2 products.

“The Strategic Review identified that Redflow batteries have unique competitive advantages over existing battery chemistries including their ability to operate in high ambient temperatures and on a daily 100 per cent Depth of Discharge usage cycle without degrading storage capacity or lifetime.

“The review noted that Lead Acid battery lifetime can be substantially reduced by exposure to high ambient temperatures and by their use for applications that require frequent or deep cycling.”

The strategic review notes that while the company has proved that its products work reliably, and can be commercially manufactured, it must now work on driving down manufacturing costs – aiming for a 30 per cent in future years as it scales up production.

It says the Flex factory in Mexico did not have the right location, skill-set, or potential scale up rates to meet Redflow’s commercial needs, and the current manufacturing arrangements did not deliver sufficient net profit margin for the business to be sustainable.

“Redflow is confident that the operating path described here is tenable, appropriate, and provides the best prospects of commercial success for the company,” it says. It will make a further update in June.

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29 Comments
  1. solarguy 2 years ago

    It’s a shame, but I’m not surprised. If they get the value proposition sorted, it will be very competitive.

    • David leitch 2 years ago

      That is a tautology if you don’t mind me saying so.

      • George Darroch 2 years ago

        Missing value propositions abound.

        • Colin 2 years ago

          The wags at RenewEconomy are wagging, it seems. All in good pun.

  2. Craig Allen 2 years ago

    It’s a pity they can’t manufacture in Australia at a competitive price. Musk can do it in the US but I guess that’s because the US has such a meagre minimum wage.

    • George Darroch 2 years ago

      And couldn’t make it work in Mexico either.

    • Brunel 2 years ago

      Nothing to do with the minimum wage if you look at how much the Tesla factory workers get paid.

      And if it is about the minimum wage, why not build the factory in Bangladesh.

      • Colin 2 years ago

        Robotics continue to replace even low minimum wage workers, sadly.

        • Brunel 2 years ago

          So we need a universal income in AUS.

          • Colin 2 years ago

            True.

    • Simon 2 years ago

      Given that Australia and Chile supply about 80% of the world’s lithium between them, you’d think they would have some ability to influence where battery factories are built.

  3. howardpatr 2 years ago

    http://www.aussiebatteries.com.au/off-grid-solar/battery-banks/24v-450ah-tubular-gel-battery-bank?gclid=Cj0KEQjw9YTJBRD0vKClruOsuOwBEiQAGkQjP3isgYtyXke-1gasABV76TE-0_uYdHGigKzwNE6oUk0aAq8M8P8HAQ

    This is for 10.8 kWh lead acid battery storage bank on offer for under $4,000.

    It is going to be intriguing to see what Ecoult can sell its 20 kWh plus UltraFLEX system for – hopefully it won’t go the way of the RedFlow Zcell?

    • Gnällgubben 2 years ago

      The problem with lead-acid is that to maximize lifetime they shouldn’t be discharged more than 20%. So a 10 kWh lead-acid bank really only is 2 kWh usable if you want them to last long.

    • Jay 2 years ago

      You are trying to scam people pretending that lead acids compete at a $ per kWh with lithium ion. As pointed out to you quote 10.8kWh but to achieve the same lifespan of lithium ion you can only use 20% of that.

      What Red Flow and Tesla are offering is 100% Depth of Discharge available per day.

      So to match Tesla you need 70kWh of lead acid batteries at 20% DoD to get 14kWh available per day.

      Please price up all the batteries and components required for a 70kWh setup and post again

  4. Andy Saunders 2 years ago

    Would have thought flow batteries have an edge in high-energy (as opposed to high-power) segments. Basically the marginal cost of increasing energy (hours of storage) is the extra chemicals plus tankage – relatively cheap compared to lots more lithium and cobalt?

    • Carlagwheeler 2 years ago

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  5. wmh 2 years ago

    I wonder how long the membrane lasts and whether membrane maintenance is expensive or inconvenient.

    • Colin 2 years ago

      I’d like to see an environmental (cradle to grave) review of these Redflow Zinc-Bromine batteries versus the more well-known Tesla Lithium-Ion versus the traditional Lead-Acid batteries.

      Any chance of an article on this, Giles?

      • John Norris 2 years ago

        Any chance you could review the available literature for us Colin?

        • Colin 2 years ago

          Unfortunately not really my area but I do find it interesting. Any reason you would ask me to review it, John. Just curious.

          • John Norris 2 years ago

            Not trolling. You asked Giles to do it; I was suggesting you could do it.

          • Colin 2 years ago

            Are you always this rude?

            My comment was directed to Giles. Why stick you nose into it?

            And I suggest you stop trolling and mind your own business.

          • John Norris 2 years ago

            Peace.

          • John Norris 2 years ago

            PS Sorry, I didn’t mean to be rude.

  6. Joe 2 years ago

    Is Red Flow the first to fall in a competing market space. It sort of reminds me of the ‘war’ between Beta and VHS when recording devices were launched. Beta was supposedly the better format but VHS won the ‘war’ on the back of support from the Hollywood Big Boys.

    • Colin 2 years ago

      The Beta to VHS analogy provides an interesting comparison.

      The Tesla type Lithium-Ion batteries seem to have won the short-term and medium-term battles over their competitors. They’ve certainly left the old Lead-Acid batteries in their rear view mirror eating dust.

      Long-term will be different though as they are approaching the physical limits of their efficiency. I have heard that an additional 30 per cent improvement is still possible though.

      Batteries are what PCs and Macs were to a previous generation ie they provide massive potential for growth, profits and job creation for those who gain a technological lead.

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