Insurer Munich Re has launched what it claims is the world’s first long-term insurance plan for battery performance, signing up ‘all-iron’ flow battery maker ESS Inc as its first customer.
One of the insurer’s management board, Peter Röder, described the ability to insure battery performance as a missing “key piece of the puzzle in decarbonising our energy sector”.
“For the first time, battery manufacturers can insure against the risk of their products not delivering as promised,” Röder said.
Aimed at major projects such as stationary storage systems deployed for grid stability or peak demand reduction applications, manufacturers will be able to give customers performance guarantees by backing their warranties for 10 years.
Munich Re claimed manufacturers can “unburden their balance sheets” because insurance will cover the cost of repair or replacement of defective battery modules that exceeds the agreed cover amount. The insurer said this should also make it easier to obtain project financing for stationary storage projects, by capping the maximum costs of warranties. Cover can be extended to individual projects, meaning customers are covered even in the event of manufacturer insolvencies.
Energy-Storage.news reached out for expert opinion and commentary on the launch and Munich Re’s claims – from both an independent advisory firm and an energy storage market research company – but did not receive replies in time for the publication of this story.
‘All iron’ flow battery goes first
The first customer announced by Munich Re is ESS Inc, US-based maker of a novel ‘all-iron electrolyte’ redox flow battery claimed to be suitable to rigorous charge and discharge cycles, as well as providing long durations of energy storage, typically eight to 10 hours. The company has deployed commercial installations for chemical company BASF, which is also a “strategic investor” in ESS Inc. ESS Inc claims its systems have a potential 20,000+ cycle life, approximately more than 20 years of operation.
Flow batteries have been touted as an emerging competitor to lithium-ion batteries in the stationary storage space, due to their ability to store energy for more than four hours without facing battery cell degradation.
However, due to their status as a newer, relatively untried technology – despite originally being developed several decades ago though NASA – plus the fact that competing flow battery makers use different electrolyte chemistries, materials and system design, for the most part they remain at the earlier stages of reaching bankability in the way that lithium has in recent times.
Last month, Energy-Storage.news reported on one specific project where in order to reduce the cost of investment for its customer, flow battery maker Avalon chose to rent out the electrolytes to the customer, Sandbar Solar. The financial arrangement was separate to the one covering the cost of the system itself and its operational and maintenance costs.