EXPERT GUIDANCE FOR THE PATH AHEAD
Solar Battery Storage
Battery storage is an exciting and potentially ‘game-changing’ Clean Technology to help facilitate the transition of electricity networks from centralized power grids to more distributed ones globally. One of the biggest drivers for this has been the need to deploy storage applications throughout the electricity value chain to enable greater penetration of variable renewable generation. Risk Consulting Partners’ Clean-Energy insurance practice has engaged London underwriters, clarifying the following risk hazards specific to emerging solar battery risks: supply volume, new entrants, technology, geographic, reputational, wind storm, flood, earthquake, environmental, loss of electrical supply.
What our friends at Lloyd’s of London tell RCP:
- Each type of battery storage system has its own specific risks and different manufacturers have different approaches to mitigating that risk.
- Insured risk needs to consider the role of international standards for compliance, manufacturers warranties, combined with the deployment history of a technology, which can provide a proxy for the quality of design and product assurance.
- Battery manufacturers are still choosing to produce their cells in different formats with changing characteristics.
- The track record of new manufacturers within the industry has not been good, with a number of high profile new entrant manufacturers either departing from the business or being taken over by another supplier (U.S. Energy Information Administration (2017). International Energy Outlook 2017. Report: Chapter 5).
- There is a risk of over-capacity in the market, as investment has been made ahead of developing projects.
- A large battery installation of 10 MW, requires US$10-15 million of battery cells. This represents a sizeable risk investment and a new market entrant is unlikely to give sufficient confidence and certainty to an investor to justify purchase at this scale (Malhotra, A., et al. (2016). Use cases for investment stationary battery technologies: A review of the investment and existing projects, Renew. Sustain. Energy 56: 705–721).
Lloyd’s of London Underwriters will continue to be engaged with RCP for break-out insurance coverage specific to this emerging Battery Storage technology.
(Photo Courtesy of: https://www.zoomtanzania.com/electrical-equipment/solar-batteries-958920)