The battery energy storage insurance market will be affected by the Moss Landing fire and, according to a specialist broker, will probably lead to certain components being blacklisted by insurers. Some chemistries will face closer scrutiny.
Dr Tom Harries, partner at Nardac insurance, told BEST in an interview specialist battery energy storage system insurers already understand the risks of fire and factor that in to pricing. “Unfortunately for the insurers that insured Moss Landing, they’re going to get hit hard, but they would have known the risk doing it in the first place and they would have been paid more for insuring this,” he said.
Nardac is an energy and infrastructure reinsurance broker and managing general agency. It operates internationally.
He said insurers are always on the look-out for bad suppliers. “You know, whose equipment is defective, whose equipment fails, catches fire, whatever. And until this date, there have not been any clear examples of suppliers that are bad. There are new suppliers who are unproven. There are ways around that.”
He said if cells are defective and turn out to be the cause of the fire, insurers will be paying very close attention to any batteries in future that use those cells. “It doesn’t make them uninsurable, it just means you’re on the watch list, so to speak.”
The EPRI database lists the battery module as coming from LGES. The cause of the fire has not yet been disclosed by investigators.
Harries said that as NMC batteries have a lower temperature threshold for thermal runaway than LFP, insurers have always preferred LFP since it became popular. “It just means that for NMC projects going forward, insurers will probably be scrutinising them even more closely, making sure the spacing is adequate between batteries. And adequate means generally three metres between twins of batteries.”
He said because there is no definitive engineering standard, many suppliers tell clients their BESS can be closer than three metres to maximise revenue. “But it’s important for the developers themselves to realise – and the engineers – that there’s an insurance requirement, which just goes on top of these engineering requirements.”
Harries believes a knock-on of the latest fire is that US counties will put a moratorium on planning consents for new BESS projects. “I definitely expect there to be some sort of implication or effect on planning.”