thermal runaway

What Is Thermal Runaway and How Can It Be Avoided?

Thermal runaway is a hazard that can occur in energy storage systems (ESS) using lithium-ion batteries. Thermal runaway occurs when heat builds up in a lithium-ion battery faster than it can be dissipated. 

Insurers take a hard look at lithium-ion battery energy storage risks because of the risk of thermal runaway.

Battery Energy Storage System Benefits

Energy storage systems are being deployed across the U.S. in a wide range of applications from electric vehicles to use in commercial buildings such as peak shaving and demand response.

The battery energy storage systems (BESS) market is dominated by lithium-ion battery chemistry. 

Lithium-ion battery technology innovations are rapidly advancing, and yet, are still in the very earliest stages of development and potential applications. Prices for lithium-ion batteries continue to fall offering compelling return on investment (ROI) through demand response and peak shaving.

Lithium-ion BESS benefits include:

  • Small footprint
  • High energy density
  • Proven technology
  • Fast response times
  • Scalability
  • Long cycle lifetimes

However it can be difficult to get proper insurance for energy storage systems because of a hazard known as thermal runaway.

What Causes Thermal Runaway?

Thermal runaway occurs due to mechanical, thermal, physical or electro-chemical abuse that damages a battery cell. 

Damage causes an elevated internal temperature in the battery that gets high enough to induce rapid exothermic decomposition of the cell materials. 

As decomposition occurs, the lithium-ion battery heat builds up more quickly inside the battery than it can be dissipated. 

The result is ignition of the battery or even explosion.

Decomposition of one cell in a storage system can propagate the thermal runaway process to other nearby batteries, modules or racks within the ESS. 

This creates a domino effect of all the cells catching fire, hence the term “thermal runaway”. 

Preventing Thermal Runaway In Lithium-Ion Battery ESS Systems

FM Global released a report documenting a series of small, medium and large scale tests of energy storage fire hazard scenarios to evaluate the best practices for energy storage risk management.

Tests confirmed that ignition of a single electrochemical cell in a module was sufficient to ignite other modules in the same rack. 

The FM Global tests have risk management implications for BESS installations. 

Test results suggest that thermal runaway may be reduced by asking key questions about the BESS installation and taking the certain precautions, including, but not limited to, the following:

  • Are BESS buildings constructed using non-combustible materials such as steel and concrete?
  • Is the BESS space adequately conditioned and cooled to maintain a maximum temperature of 75 degrees Fahrenheit?
  • Are BESS racks separated by a minimum distance from combustible and non-combustible objects?
  • Is there sufficient sprinkler fire and smoke detector protection – including proximity and water flow – according to expert guidelines and battery chemistry?
  • Is ceiling height adequate to avoid off-gassing build up?
  • Is a commissioning plan in place to ensure proper installation, maintenance and testing of the energy storage system?
  • Is there remote monitoring of the BESS system?
  • Is there an active maintenance log being kept regarding status of the BESS system?
  • Is there a plan in place in the event of a fire?1

Broader built environment risk factors may be categorized using the acronym “COPE” which stands for constructionoccupancyprotection and exposure

Insurance For BESS Businesses

Work with your insurance broker to evaluate your energy storage business exposures.

Business insurance exposures include, but are not limited to:

  • BESS manufacturing
  • BESS installation and general contracting
  • BESS consulting and project development

Make sure you have the right insurance and surety solutions for your business including, but not necessarily limited to, the following:

  • General liability insurance
  • Umbrella insurance
  • Professional liability insurance (E&O)
  • Property insurance
  • Environmental liability
  • Directors and officers insurance
  • Business auto
  • Inland and ocean marine insurance
  • Offtaker insurance
  • Interconnection, procurement, PPA and other bonds

In addition to the considerations above, if you are considering installing a new battery energy storage system, your insurance broker should be able to help advise you on new technologies that are being developed to prevent thermal runaway from occurring in the first place.

Image credit: Bjørn Nielsen


  1. For instance, even if a fire is suppressed, a fire watch should be maintained in the event of an ESS fire because ESS systems are known to reignite.

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