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Battery energy storage insurance protects lithium-ion battery energy storage systems (BESS) manufacturers and on-site commercial battery systems.

Whether you’re a BESS developer, IPP or battery manufacturer, you need insurance to protect your business and yourself from lawsuits. 

This may include commercial general liability (CGL), products liability, property insurance, environmental liability, ocean and inland marine transport, umbrella or excess coverage, cyber liability, professional liability/E&O and other important business insurance.

You and your business should be protected against claims of bodily injury and property damage, fire and other perils, mechanical breakdown, failure to perform, lost income and more. Perils covered by energy storage insurance may include fire, wind, hurricane, tornado, flood and other climate related risks.

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If you are a battery energy storage installer or solar installer, you should also be aware of what insurance to avoid.

How Battery Energy Storage Insurance Helps

Battery energy storage insurance is for manufacturers, developers, systems integrators, contractors, installers and system owners.

Property and general liability coverage can protect any size in megawatts of BESS. Smaller portfolios may also be eligible for underwriting, depending on their configuration and scope. Battery energy storage coverage helps project owners, such as merchant batteries, to protect their physical assets from fire, equipment breakdown, flood, wind, hail and other perils.

Battery energy storage insurance applications will vary based on your business model. For instance, a battery manufacturer may seek commercial general liability and products liability, whereas an energy storage project developer may seek performance insurance or an extended warranty. As such, underwriting considers business and system information to determine premiums will vary. Information for underwriting may include:

  • Battery chemistry type (eg. lithium iron phosphate, lithium nickel manganese cobalt oxide, etc.)
  • Manufacturer name and location
  • Project size (MW / MWh)
  • Equipment replacement cost
  • Projected 12 month revenue
  • Spares planned for availability to project
  • One Line Drawings
  • Contracted Energy Services Agreements (ESAs)1
  • Name and experience of operations and maintenance (O&M) provider
  • Interconnection Agreement (if applicable)
  • Detailed description of energy storage equipment (make, model, manufacturer, # of) to be used including: 1) OEM and model number for each major piece of equipment; 2) OEM product and performance (as appropriate) specs for each major piece of equipment; 3) OEM warranties for each major piece of equipment
  • Remote monitoring / operation capability
  • Site plan and address
  • Construction of host’s building
  • Host’s internal protection (sprinklers, monitored alarms, etc.)
  • Details of site security system
  • Manning of site, days per week and hours per day
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Underwriting insurance for battery manufacturers requires a holistic approach that considers the risks to the company across the entire value chain. 

This means working with an insurance broker who understands not only the risks associated with the batteries themselves, such as risk of thermal runaway or a costly recall, but also how key employees, executives and the Board of Directors may be exposed to a potential lawsuit if not properly covered. 

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Protect Valuable Battery Energy Storage Business Income

Battery energy storage insurance may be purchased to cover performance of battery installations for large energy storage projects… Such insurance may include performance insurance, an extended warranty or offtaker insurance and solves the “performance gap” problem, thereby reducing risk for owners, contractors and lenders.

Energy storage performance insurance is underwritten by engineers experienced in energy efficiency risk and backed by A+ rated insurance carriers by A.M Best.  Underwriters examine technical documentation, as described above, during the underwriting process.

Project owners benefit from having an insurance policy backed by A+ rated insurance carriers. Equity investors and lenders benefit from having insurance in place because it reduces default risk and increases creditworthiness. Working with the right insurance broker may also reduce your cost of capital as a developer.

If you have questions about securing battery energy storage insurance for your business, you should schedule an appointment with me today. 

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Footnotes

  1. ESAs are performance-based contracts through which a service provider agrees to finance, develop and deploy energy efficiency/renewable energy projects with no (minimal) upfront capital expenditures.