Beyond the headlines: The BESS insurance market after Moss Landing

kWh Analytics recently convened its Renewable Energy Broker Council to discuss the impact on the broader BESS insurance market. The council has developed a nuanced perspective on what this incident means for the future of BESS insurance.

Putting Moss Landing in context

It’s important to view the Moss Landing incident through the appropriate lens. The industry has been moving away from indoor BESS retrofits, favouring containerised outdoor storage solutions.

While unexpected, the event was not a major shock to the industry, according to the Broker Council.  This is mostly due to the fact that the facility utilised older nickel manganese cobalt (NMC) battery chemistry in a retrofitted indoor setting, and was built with protection schemes prescribed under earlier versions of industry standards, a configuration that would be unlikely in today’s designs.

That said, this event highlights how rapidly the industry is evolving in terms of product design and technology deployment.

From an insurance perspective, this represents what can be characterised as an impactful but not defining loss for the industry. The event goes a long to vindicating the industry’s decision move to outdoor, containerised batteries over the past five years.

Current market conditions remain stable

Despite the publicity surrounding the incident, current rate levels remain stable at approximately 30-40 cents per US$100 of insured value for technology risk, with well-designed projects potentially securing more favourable terms.

Indoor BESS installations, particularly those using NMC chemistry, will face significantly higher scrutiny. Most underwriters are hesitant to insure indoor installations, creating particular challenges for densely populated urban areas such as New York, where space constraints often push developers toward indoor solutions. Nevertheless, with the right willingness to pay, coverage can still be secured for these projects, potentially by tapping international markets.

The evolution of thermal runaway protection

Thermal runaway remains the primary risk concern for lithium-ion BESS installations. Interestingly, the industry’s approach to managing this risk has come full circle. After experimenting with various detection, protection, and suppression methods, industry consensus is returning to a “let it burn” philosophy. This approach recognises the fundamental nature of thermal runaway: once initiated, these events are managed rather than stopped. The key aspect for mitigating thermal runaway is to prevent the chain reaction from occurring in the first place.

The future: AI and predictive analytics

Artificial intelligence (AI) and predictive analytics represent the ‘golden egg’ for BESS safety. The most promising developments are occurring in software-based monitoring technologies designed to identify pre-failure conditions in individual battery cells and prevent thermal runaway before it begins. These battery monitoring systems exist today and should take advantage of the AI opportunities to further enhance their predictive capabilities.

These systems not only enhance safety but can also provide significant potential insurance advantages by demonstrating lower failure probabilities to prospective insurance carriers. As these technologies mature, indoor installations and vertical stacking alike may become less risky and insurable.

Regulatory environment continues to evolve

The regulatory framework surrounding BESS continues to develop alongside the technology. The NFPA 855 standard has evolved greatly since its inception in 2020 and will continue to do so. Building and fire codes will continue to evolve to specifically address the manufacturing of BESS cells, racks, and systems. Asset protection and life safety guidelines from insurers will evolve to reflect actual incurred losses versus perceived risk exposures.

While regulatory advancement is necessary, some proposed requirements are concerning. Many urban areas continue to promote detection, protection and suppression approaches that are already considered ineffective. A suggested 3,200-foot separation requirement currently being considered in California would effectively halt BESS project development if implemented.

Addressing public perception

As BESS installations grow in number and size, public awareness and opposition are increasing. Community concerns around air quality, contaminants, and fire risks represent issues that must be addressed through education and transparency. Similar patterns have been observed with other energy technologies—from natural gas turbines to solar power and wind turbine installations.

The renewable energy industry needs to emphasise that battery energy storage represents an unprecedented technological advancement. For the first time, electricity can be effectively stored at scale, providing flexibility and resilience to grid-scale electrical power systems. Some growing pains are inevitable in this transformation.

A critical aspect of public safety involves close coordination with local fire departments. Documentation of communication with local fire authorities, including training on BESS-specific firefighting procedures, carries significant weight with underwriters and can positively impact potential insurance coverage terms.

Looking ahead

Despite headlines generated by incidents like Moss Landing, the outlook for the BESS insurance market remains stable. New monitoring technologies, improved design standards, and evolving risk assessment methods are creating a more resilient power generation industry.

The number of thermal runaway events has decreased dramatically relative to the growth of installed capacity. The industry is heading toward a future where such events represent “a very small, infinitesimal risk,” making lithium-ion BESS an increasingly insurable technology.

Assets that follow industry best practices should receive favourable pricing that reflects their reduced risk profile. Projects that adhere to current codes, implement appropriate spacing between units, utilise advanced monitoring systems, and secure local fire department buy-in demonstrate measurable risk reduction deserving of premium consideration. The insurance industry will remain a key partner in increasing global BESS installations, helping identify, quantify, and mitigate risks as the technology evolves.

The authors prepared this article based on discussions from kWh Analytics’ BESS Broker Council meeting, drawing on their extensive experience in renewable energy insurance markets.

About the Authors

Geoffrey Lehv is the senior VP Head of North American Accounts at kWh Analytics, a specialist provider of insurance and data services to the renewable energy and energy storage markets. Just prior to kWh, Geoffrey was Vice President of business development at AlphaStruxure, with a focus on the transportation electrification segment. 

Ross Kiddie is a senior risk manager at Renewable Guard. He has over 25 years of experience in the renewable energy and power space and is a recognised industry leader and specialist in battery storage, risk and insurance. He has had articles published in technical magazines on topics covering nat/cat impacts for insurance, software tools for modelling risk and has been a featured speaker and panellist at the Energy Storage Summit and other international conferences.

Mark Mirek is a senior technical broker and senior advisor within the Brown & Brown Global Energy practice. He has over 29 years of experience in the insurance and engineering consulting service industries. Mirek currently serves as a subject matter expert in the energy storage, solar, and wind power generation industries.  He currently serves as a founding member on the NFPA 855 technical committee.