Despite a track record of concerning failure events in the global battery energy storage systems market, underwriters are optimistic about the sector's potential, provided key risks are managed.

This is amongst the findings of a report produced by renewable energy underwriter, GCube, which emphasises an increasing recognition of the sector's importance to the energy transition.

Fraser McLachlan, CEO, GCube, said: “The BESS sector is experiencing rapid growth. However, we don’t want to repeat the mistakes of the past of allowing growth in deployment and technological scale to take priority over quality control, and the large-scale losses and market destabilisation that result from that.”

As BESS assets' share in global renewable energy portfolios rises, GCube anticipates these technologies could comprise up to 30% of its insured portfolio by asset value by the end of 2024.


Key report findings (Source: Batteries Not Excluded: Getting the Insurance Market on Board with BESS, produced by GCube)

Key findings from the report, which is based on 12 years of publicly available data, include:

More than 50% of BESS failures occur within the initial two years of operation
Failures in BESS have seen a tenfold increase since 2016
5-50 MWh BESS account for over half of total failure events globally
48% of failures have been linked to solar-plus-storage projects

While these statistics broadly align with industry growth, there is concern that these failure trends may persist as the market deploys larger 100MW+ utility-scale assets, leading to increased financial losses for owners, developers, and insurers. This concern arises from a recurring pattern in rapidly expanding market segments, where new technologies often face challenges related to quality control – a dynamic recently observed in the offshore wind market.

Thermal runaways, in particular, which can result from insufficient spacing between batteries, potential liabilities related to risks to public safety, and challenges in transit and cargo safety, due to the absence of established shipping and packaging standards, are key risks facing BESS assets, as identified in the report.

The report outlines crucial measures for developers and owners to secure sustainable and competitively priced insurance coverage for their assets and implement long-term strategies for the broader market. These include:

Ensuring sufficient spacing between battery modules
Conducting a comprehensive root cause analysis
Carefully selecting the right type of battery for BESS
Establishing a liability framework within the market
Creating spacing standards for BESS units
Involving OEMs throughout the entire BESS project lifecycle

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