What is the best way to insure a renewable power project?

A container housing a lithium-ion battery (13-tonne) caught fire on July 30 during testing at Australia’s largest Tesla battery plant near Geelong, Victoria. For three days, the Victorian Big Battery was engulfed in flames. Multiple fire investigations are currently underway, including those conducted by Tesla Company, the Country Fire Authority, as well as the French owner Neoen. “At this point, we don’t know. “They still have a lot of analyses to do,” stated Richard Nunny, BMS Risk Solutions’ head of energy (Australia).

Following the large battery fire, BMS, which is an international insurance broking firm, has issued a warning to owners, developers, and operators of the battery energy storage systems about escalating costs. “In this loss, we’ve seen an instance of the multimillion-dollar project that was on the verge of completion when it was destroyed by fire. As a result, underwriters will pay close attention to those types of risks as well as underwrite appropriately,” said Ben Humphries (shown below), BMS’ client director for construction and energy.

Because of their great energy density, lithium-ion battery systems, according to Humphries, are the most common technology on the market. However, he claims that this technology carries different hazards than conventional battery chemistries and energy storage methods. “This is similar to what happened in Victorian Big Battery fire in that this is a fairly new technology in terms of utility deployment. As a result, you risk witnessing teething issues in these projects,” he explained.

Humphries warned of a divergence between the client, who is under pressure to pull together the finances and complete the project on schedule and cost. The insurance market is concerned with premiums, coverage breadth, and deductibles. “At the same time, the renewables insurance market has indeed been unprofitable for a long time, and it isn’t viable for insurers to keep doing what they’re doing now,” he added. As a result, insurers must strive for profitability when it comes to underwriting risks in this industry.”

The natural dangers risk offered at the chosen construction site, according to Humphries, is the first risk to look out for in every construction project. Technology and contractor selection are additional risk considerations. “Contractor selection is a major risk in battery energy storage systems (BESS), as it is in any major construction project. I believe that technological risk is a key component in BESS projects, perhaps even more so than in other renewables projects; therefore, choosing the appropriate technology, the right manufacturer, and the appropriate system design is going to affect the insurance outcome finally achieved.”

Leave a Reply

Your email address will not be published. Required fields are marked *