Skip to main content
Marsh logo

Battery Energy Storage Systems and the rising risk of thermal runaway

Energy storage and rechargeable batteries are key to unlocking the potential of renewable energy. As we touched on in the previous blog, lithium-ion batteries are already facilitating the integration of renewable energy supplies to the grid. This is a rapidly evolving field and, as with all developing technologies, some trends and pitfalls are beginning to emerge. One risk is fires caused by thermal runaway; these are causing significant losses in the industry and a tragic loss of life in some cases. In this blog, we will be exploring the issue of battery fires and discussing the mitigation strategies available.

Batteries have always been a big part of our lives, and now power our cars, laptops, and mobiles. These small-scale batteries (such as Ni-Cad and Li-ion batteries) are fairly robust and have limited power and duration. Battery Energy Storage Systems (BESS) are batteries deployed on a much larger scale, with enough power and capacity to provide meaningful storage of power for electric grids. A BESS can be a standalone system located near loads or transmission infrastructure, or integrated into renewable energy sources or other power generation facilities. BESS projects are also deployed as a power storage solution for remote areas that are not connected to the grid.

Whenever you store a large amount of energy — whether in traditional liquid/gas forms or in batteries — there is a risk that an uncontrolled release of the energy could result in a fire or explosion. In batteries, thermal runaway describes a chain reaction in which a damaged battery begins to release energy in the form of heat, leading to further damage and a feedback loop that results in rapid heating. Left unchecked, the heat generated can cause a fire. The only way to stop thermal runaway is rapid cooling of the affected cell(s); another approach is to simply separate the affected battery module and allow the reaction to reach its destructive conclusion in a safe location.

Figure 1: Thermal runaway feedback loop.

Note that even if the fire is suppressed, thermal runaway alone can generate enough heat to damage adjacent cells and propagate the reaction. Thus, thermal management, fire suppression, and physical design layout to isolate batteries from each other are all essential elements to protect a BESS installation from a thermal runaway event in a single cell.

Large-scale battery fires have occurred in almost every jurisdiction with BESS deployments over the last few years. For example, South Korea suffered multiple destructive fire events between 2017 and 2019, which led to a government investigation and orders to shut down some units and limit the charge rates of other BESS installations nationwide. Despite the changes, there were further fire events. Other global BESS fire events in Europe and North America that have highlighted that this failure mode is not unique to a particular manufacturer or design, but that the hazard is inherent in the technology.

We have observed that the majority of fires are caused by:

  • Temperature control
  • Inherent cell defects
  • Damage during construction
  • Operation of the BESS outside of prescribed parameters (temperature, charge rate, state of charge, etc.)
  • Damage due to operational negligence.

It is clear from the number and frequency of incidents that thermal runaway and battery fires are a serious risk that must be proactively managed by the owners, operators, and constructors of BESS systems. A holistic approach in BESS design is needed for each project. Batteries must be protected from day one of construction and there must be a zero tolerance approach to battery abuse. Battery management systems must be sophisticated, monitored, and responded to. Gas detection, explosion prevention, fire detection, and fire suppression as well as a robust emergency response plan are essential to mitigate the damage if a thermal runway event does occur.

There are a number of new and recently-revised standards relevant to the design and deployment of BESS systems, however the technology and industry continues to develop rapidly and is constantly innovating to improve project value and safety. We believe it is likely that standards will continue to evolve in response to learnings from events and increased understanding of failure modes in the industry. Insurers will look more favourably on BESS projects that are built in accordance with the latest standards. While future-proofing an installation to ensure long-term insurability can be challenging in this environment, success can be found in a holistic approach that covers all aspects of the design.

A recent survey undertaken by Marsh found insurers of BESS facilities were most interested in the fire protection features, followed closely by space separation between battery enclosures. To assess emergency response, underwriters look for evidence of detailed dialogue with emergency services and a written protocol for incidents (documented pre-fire plans). Ultimately, early engagement with your risk adviser is key to ensuring that your project is well protected, safe, reliable, and well positioned to benefit from a competitive insurance placement for the long-term life of the project. Marsh has a global network of engineering specialists with specific experience in Battery Energy Storage Systems to help our clients navigate these complex and nuanced design decisions.

Related Resources

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”