More than 50% of BESS failures occur within two years, says GCube report

February 21, 2024

More than 50 per cent of battery energy storage system (BESS) failures occur within the first two years of operation, while failures have increased ten-fold in the last eight years, according to a report from insurance underwriter GCube.

The study also found that:

  • 5-50 MWh BESS account for over half of total failure events globally
  • 48 per cent of failures have been linked to solar-plus-storage projects

“While these statistics broadly align with industry growth, there is concern that these failure trends may persist as the market deploys larger 100MW plus utility-scale assets, leading to increased financial losses for owners, developers, and insurers,” a GCube statement said. “This concern arises from a recurring pattern in rapidly expanding market segments, where new technologies often face challenges related to quality control – a dynamic recently observed in the offshore wind market.”

Thermal runaways, in particular, which can result from insufficient spacing between batteries are a key risk, the report said. In addition, there are potential liabilities related to risks to public safety, and challenges concerning transit and cargo safety due to the absence of established shipping and packaging standards.

Addressing emerging risks requires enhanced data and insights on the operation, performance, and failures of BESS, the report concluded. It also emphasised the importance of learning from past failures in both the BESS sector and the broader renewables market. By prioritising data-driven insights, the market can advance sustainably, safely, and reliably, the report added.

In order to secure sustainable and competitively priced insurance coverage for their assets and implement long-term strategies for the broader market, GCube said BESS developers and owners should:

  • Ensure sufficient spacing between battery modules
  • Conduct a comprehensive root cause analysis
  • Carefully select the right type of battery
  • Establish a liability framework within the market
  • Develop spacing standards for BESS units
  • Involve OEMs throughout the entire BESS project lifecycle

Fraser McLachlan, founder & CEO, GCube, said: “The BESS sector is experiencing rapid growth. However, we don’t want to repeat the mistakes of the past of allowing growth in deployment and technological scale to take priority over quality control, and the large-scale losses and market destabilisation that result from that.”

He added: “The increasing demand for BESS in the global renewable energy markets is evident. While insurers are making strides in understanding associated risks, their comfort in supporting coverage availability remains uncertain. The aim of our latest BESS report is to increase that certainty.

“GCube is a pioneer in the BESS field, and has learnt the hard way, having handled some of the largest losses in the market to date. By consistently providing transparent information to insureds and brokers regarding underwriters’ perspectives, we aim to foster sustainable, safe, and reliable growth in the sector.”

  • To read the full report, click here