GCube Insurance, a leading insurance company for renewable energy projects, announced the launch of a new consortium to provide cover for battery energy storage systems (BESS) worldwide.
The consortium, comprising six Lloyd's of London syndicates, will provide up to $100 million of 'A-rated' insurance capacity to BESS developers and asset owners worldwide, the company said in a release.
The consortium, which will be led by GCube, was launched in response to "increasing demand from brokers and the BESS market", GCube said, adding that the move would bring "much-needed lead capacity and expertise to support the industry as it scales up to become an integral part of the global energy mix".
The company noted that larger utility-scale BESS assets with capacities exceeding 100 MW and durations of up to 4 hours had started to come online, increasing project values – and associated financial risks.
"However, given the fast pace of technological evolution in the sector to date, there remains a shortage of long-term data to inform risk management strategies and build the confidence of underwriters in this new and emerging technology," the company said.
Setbacks often come early in the project lifecycle, GCube said. The company's research report Batteries not Excluded points out that more than half of reported BESS failures occur within the initial two years of the project's operation.
Fraser McLachlan, Founder & CEO, GCube Insurance, said: "We have been studying developments in BESS and patiently increasing our capacity over the last 12 years. Our BESS consortium now formalizes our significant commitment to the sector. BESS has reached a point of maturity where more and more capacity is required, but the complexity of mitigating losses with evolving technology also requires this capacity to be well-versed in handling claims and selecting risks. This is the basis for GCube expanding its presence in the sector."