Investments in BESS are not merely technical upgrades; they are strategic moves to enhance a country’s energy resilience in an increasingly interconnected and data-driven world.
As the world accelerates towards a digital and sustainable future, Battery Energy Storage Systems (BESS) are emerging as a cornerstone of modern power infrastructure. Their ability to stabilise grids, integrate renewable energy, and ensure continuity of supply is now fundamental to the digital transition of national energy systems. Investments in BESS are not merely technical upgrades; they are strategic moves to enhance a country’s energy resilience in an increasingly interconnected and data-driven world.
The Evolving Role of Battery Storage in Today’s Energy Landscape
While lithium-ion battery technology has been a topic of industry discussion for over a decade, large-scale deployment has only gained momentum in the past three years. The number of operational and planned projects continues to rise, and the pool of technology manufacturers has expanded significantly. During this period, industry standards have matured, and both battery technology and risk management systems have advanced. Today, the sector predominantly utilises lithium iron phosphate (LFP) batteries, supported by intelligent management and prevention systems.
This steady improvement in risk quality has been met with a positive response from the insurance market. BESS projects now occupy a vital place in renewable energy insurance portfolios, helping to balance exposures across different generation assets. Initially, insurers’ greatest concerns centred on the chemical reactions within batteries, particularly uncontrolled temperature increases. However, technological progress has increased insurers’ comfort, enabling them to distinguish between high- and low-quality risks, which in turn has led to gradual improvements in insurance terms and pricing.
Decoding the Critical Elements of BESS Risk Assessment
Despite these advances, insurers still view energy storage technology as presenting a unique set of challenges. Demand for BESS devices currently outstrips production, resulting in extended lead times. Many projects are bespoke, requiring compatibility between components and making rapid replacement difficult in the event of damage. The technology’s relative novelty, combined with high-profile incidents (notably fires), means insurers remain cautious.
Insurers require a comprehensive range of information to assess BESS risks. Key factors influencing the price and scope of cover include: the technology used, the manufacturer and contractor’s experience, system design and container spacing, test results, availability of critical spare parts, and details of preventive measures against natural disasters.
Major Insurance Claims in BESS Installations
Causes of losses in BESS installations are varied, ranging from manufacturing defects to external factors. Investigations into BESS fires have identified three common causes:
Broader causes include:
Exothermic reactions can trigger uncontrolled thermal runaway, leading to rapid, intense fires and the release of large volumes of heat and toxic gases. Once initiated, these fires are difficult to extinguish and may reignite hours or days after the initial event. The only effective mitigation is sustained cooling or quarantining damaged cells until fully discharged. While sprinkler systems can cool the source, they cannot extinguish such fires outright.
Recent High-Profile BESS Fire Incidents Underscore Ongoing Industry Risks
The Road Ahead
As energy storage becomes the backbone of digital power systems, insuring these assets demands an increasingly tailored approach. The growing popularity and technological advancement of BESS have prompted insurers to expand capacity, confirming the sector’s attractiveness. However, as the scale and number of projects increase, so too do the challenges of risk management and the need for innovative insurance solutions.
HORIZON Risk Thought >> Fast Forward
The complexity of today´s risk environment is changing at an accelerating pace, making risk management even more challenging. We have created HORIZON, firstly as a print publication and now as a page for sharing the latest insights about ongoing transformations. Our risk specialists will continue to provide their expertise and knowledge to shine a light on the challenges of the future.
Michał Olszewski
General Manager Risk & Insurance Technique
GrECo Poland
T +48 797 198 850
