Improve BESS insurance terms with battery behavior monitoring

climate insurance

The battery energy storage (BESS) industry has struggled with securing BESS insurance coverage, with high-profile incidents of thermal runaway leading insurers to reduce available capital. However, new insights into root causes of BESS — and a new partnership — could lead to better BESS insurance coverage options for asset owners, investors, and lenders.

Battery analytics software provider TWAICE and NARDAC, a specialist energy and infrastructure broker, are combining proactive real time analytics with existing, passive mitigation strategies, such as physical spacing. By identify best practices in BESS project development and operations, insurers will have better insight and be able to offer improved coverage terms.

“In partnering with NARDAC, we are able to offer tangible financial benefits to the entire energy storage market,” said Stephan Rohr, CEO of TWAICE. “With battery analytics like TWAICE’s, the risk of a safety incident is lowered thanks to our autonomous monitoring and analytics that detect issues before they spiral into a damaging event. We are excited to work with NARDAC on extending these benefits to the broader storage market.”

BESS failures

Recent research from TWAICE in partnership with the Electric Power Research Institute (EPRI) and Pacific Northwest National Laboratory (PNNL) on the causes of energy storage failures shows that the likelihood of failures has decreased by 97% since 2018.

But while the frequency of thermal runaway events has fallen, the severity remains high, leaving insurers exposed to multi-million-dollar claims. Until now, the focus has been solely on passive risk mitigation – largely increasing the spacing between batteries.

By continuously monitoring and analyzing battery behavior, however, battery analytics software identifies future safety issues before they spiral out of control. The software warns about risks well in advance, giving time to proactively mitigate any potential incidents.

BESS insurance

By implementing battery analytics project risks are reduced, enabling improved BESS insurance terms from underwriters.

“The pipeline for BESS projects globally is game-changing for further deployment of renewable energy. But if underwriters don’t see a way forward on better management of risks like thermal runaway, then insurance capacity will be reduced – lifting premiums – financing will be harder to secure, and battery development costs will remain high,” said Tom Harries, Partner, NARDAC.

BESS insurance isn’t just a binary relationship between cost and outsourced risk, reminds Harries.

“In the operational phase for BESS projects, prudent asset managers can use insurance as a competitive advantage. Those that run assets with minimal oversight will face insurance premiums that are a disproportionately high share of operating costs. But complimenting existing hardware and site layout strategies with advanced battery analytics will lower your project’s risk of large, thermal runaway events.”

That’s why they believe the key is new technologies and partnerships that harness insights available from artificial intelligence to improve the confidence of insurers in providing underwriting services and to improve insurance terms for the buyer.

TWAICE and NARDAC

Learn more in this whitepaper from TWAICE and NARDAC, with supporting cases to underpin the value of battery analytics for insurance coverage.

TWAICE provides advanced software solutions for designing, validating, and operating batteries at scale, combining deep battery knowledge with artificial intelligence to generate actionable insights. While Battery Management System (BMS) providers offer basic monitoring capabilities, TWAICE exceeds the traditional service by providing advanced analytics that uncover hidden patterns and anomalies to optimize battery performance and lifespan. As an independent third-party, TWAICE ensures unbiased recommendations, free from ties to specific insurance companies, manufacturers or vendors.

NARDAC is a specialty wholesale, reinsurance broker, and Managing General Agency (MGA) that offers a unique combination of technical resources to successfully navigate the challenging and ever-evolving risk and insurance landscape. NARDAC understands that traditional approaches to insurance and risk management are increasingly ineffective and that creative, technical solutions will lead their clients towards a new risk transfer reality. NARDAC is a part of Amwins – a leading global specialist insurance distributor.

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