Batteries not excluded

Battery and Energy Storage Systems (BESS) are essential for the global shift towards renewable energy. They store excess energy from renewable power and release it when needed. However, BESS is still a new and evolving technology, with many challenges and risks.

As an early adopter in the field of Battery Energy Storage System (BESS) underwriting, GCube has played a pioneering role in shaping and advancing BESS insurance from its inception.

However, we also learnt the hard way early on about the risks that come with the technology, when, in 2012, a fire at Xtreme Power in Hawaii, one of the largest operating wind energy storage systems in North America at the time, destroyed the 15MW battery bank and generated a USD27,000,000 loss. While no one was hurt, the fire is a constant reminder to GCube and the wider renewables insurance sector of the uncertainties that remain when underwriting BESS.

Among the main challenges of BESS underwriting is the scarcity of data and insights on how BESS works, performs, and fails. Consequently, underwriters continue to exercise caution when it comes to BESS technologies. Ongoing concerns underscore the pressing need for answers to critical, unaddressed questions.

However, collectively we know that BESS is a vital ingredient of our clients’ renewable energy portfolios. While market data is limited, we must begin harnessing what information is presently available to start unravelling the risks and prospects associated with this nascent technology.

In our latest market insights report, “Batteries Not Excluded”, we provide an analysis of publicly available data on BESS Failure Events globally, which we combine with evidence and insights from GCube’s specialist underwriting teams and third-party contributors in the market. We also highlight the journey of BESS – once a side-line act to the established renewables technologies, like wind, solar, and hydro, now elevated to an essential asset within the sector, increasingly included in insurance coverage in key markets around the world.

In doing so, “Batteries Not Excluded” aims to give asset owners and developers a transparent insight into the current state and future direction of BESS underwriting, as well as the opportunities and challenges ahead. The report also offers recommendations to owners and developers on how to increase the confidence of underwriters offering insurance solutions within this emerging field. GCube's market insights reports are available exclusively to GCube's insureds and brokers.