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Marsh Specialty hosts the Battery Energy Storage Systems (BESS) event

Marsh is delighted to have hosted the Battery Energy Storage Systems (BESS) event, Half a gigawatt and beyond.

Battery energy storage systems

On 10 November, Marsh Specialty hosted the Battery Energy Storage Systems (BESS) event, Half a gigawatt and beyond, in Tower Place to explore how megabatteries are changing the BESS insurance market. This was the first Marsh UK event of its kind held in the UK that focuses entirely on BESS risk management and the future development of the insurance market. The session also included a lively Q&A exchange that yielded interesting and insightful conversations for all parties representing renewable energy developers, risk managers, financiers, and investors. Discussion was facilitated by a panel of BESS experts including: Darren Popham (Head of Sales, UK Power & Renewable Energy, Marsh) as chair, Melanie Carter (Senior Underwriter, Aviva), Daniel Stevens (Renewable Energy Engineer, AXIS), and John O’Toole (Director of UK Asset Management, AMP). During the event, Marsh’s Head of Climate and Sustainability, Amy Barnes, presented live from COP27 to share the latest renewable energy insights with the audience. Her message - ‘the need to de-risk projects to accelerate capital for the transition’ - was particularly crucial as BESS technology is a crucial component of the transition to renewable energy across the globe. 

BESS technology is still relatively nascent. This has caused hesitancy in insurers who have difficulty assessing the level of risk with thermal runaway in these projects; as was evident during the event’s discourse. The need for collaboration was a strong thread throughout the discussion, particularly with regard to the role that both insurance and financial institutions play in accelerating BESS development. The panel were in agreement that moving forward it would be beneficial for a global standard to be adopted on the regulations of batteries used in BESS sites. NFPA855, the standard for BESS projects commonly adhered to, was viewed by attendees as inadequate and only defines the minimum standard sites should be built to. They also highlighted NFPA855 as inappropriate for the UK BESS market, given space limitations and that the standard isn’t broad enough to consider stacking. 

Another outcome of discussions was arrangements for fire and thermal runaway protocols are imperative to sufficiently mitigate risk. A national, or even global, developed protocol for dealing with thermal runaway in BESS systems would be warmly received by the panel and audience. Even though there are currently millions of battery cells operating and not going into thermal runaway, improving existing safety issues will improve insurability. Rural BESS sites can be protected by lesser funded and experienced fire departments, resulting in large inconsistencies of how thermal runaway is treated. Similarly, the discussion - particularly from insurers - also highlighted a desire for a global standard covering the distance between battery containers. This would provide further reassurance for insurers that the total loss in the instance of a thermal runaway event is limited to a single container. There is currently great disparity in the size of BESS projects, for example, the availability of cheaper land in US versus UK results in American sites being built on larger plots with greater space between BESS containers. A cost-effective resolution currently touted, to compensate for lack of space in the UK, is to erect concrete fire walls between batteries. Any solutions considered to the risk of thermal runaway, whether when building new or renovating existing sites, should include discussions with risk engineers in the insurance market. Collective decisions will improve confidence in projects. 

Explanations of how efficient and enhanced exploitation of data could improve safeguarding measures in BESS facilities, was another important topic introduced by the panel. Currently, data in batteries is advanced, even if the utilisation of the data produced isn’t as prominent. Data provides information on the safety and proficiency of each individual cell. This subsequently offers advanced indications of fault or damage within cells to alleviate the threat of cell damage or instances of thermal runaway. Proficient data use can also reduce battery abuse, as battery usage can be monitored closer to significantly decrease working batteries into extremes that cause degradation. However, the constant observation and surveillance as a result of extensive data use may lead to hesitancy within the BESS sphere. There is, however, much more that can be done with BESS data, and Insurers will consider the availability and quality of data when assessing risk. 

Within the UK, there are a significant number of 50 MW projects. The consensus from this event was that the future will see a proliferation of megabatteries where sites boast capacity from 100-400 MW. The ‘100 plus new BESS projects’ scheduled for construction in the UK demonstrates the appetite and pace for BESS development, eclipsing the exponential growth already seen in the past five years. As the size and scope of BESS projects increases, it is critical that the market adapts correspondingly. Technology is improving within batteries too, as projects progress from nickel, manganese, cobalt (NMC) to lithium ion phosphate (LFP) based systems. This is particularly pertinent to the insurance market as this technological breakthrough yields lower energy density in BESS projects; which insurers consider to be a significant mitigation of the loss potential. 

The successes of this event have shown that, dialogue, education, and support are all essential for developing positive change for BESS risk management. Building resilience in this evolving area is crucial as the world transitions to a net-zero economy. In the future, BESS will have a profound impact on energy systems around the globe and the path to carbon-neutral societies. To find out more about how these risks may impact your businesses, reach out to your advisers.

 

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