Why do insurance companies require thermal runaway assessments for your BESS?

Insurance companies require thermal runaway assessments for your BESS because battery fires present unique risks that traditional fire safety measures cannot adequately address. Thermal runaway creates cascading failures that spread rapidly between cells, producing toxic gases and extreme temperatures that conventional suppression systems struggle to control. These assessments provide insurers with critical data to evaluate risk exposure, calculate appropriate premiums, and determine coverage terms for battery energy storage projects.

What is thermal runaway and why is it a critical concern for BESS projects?

Thermal runaway is a dangerous chain reaction in lithium-ion batteries where one overheating cell triggers adjacent cells to fail in rapid succession. The process begins when a battery cell experiences excessive heat, overcharging, physical damage, or manufacturing defects, causing internal temperatures to rise uncontrollably and releasing flammable gases.

The cascading nature of thermal runaway makes it particularly hazardous for large-scale BESS installations. Once initiated, the reaction spreads from cell to cell within battery modules and can propagate throughout entire container systems. Temperatures can exceed 1,000°C, whilst the process releases toxic gases including hydrogen fluoride, carbon monoxide, and significant volumes of highly flammable gases such as hydrogen and methane that pose serious health and environmental risks.

Unlike conventional fires, thermal runaway events are extremely difficult to extinguish and can reignite hours or even days after appearing to be controlled. The self-sustaining nature of the reaction means that even cutting off external oxygen sources may not stop the process, as the batteries generate their own oxygen during thermal decomposition.

For BESS projects, this presents unique challenges in terms of site safety, emergency response planning, and potential business interruption. The high energy density of modern battery installations means that a single thermal runaway event can result in total system loss, significant property damage, and extended downtime whilst replacement equipment is sourced and installed.

How do thermal runaway assessments help insurance companies evaluate BESS risks?

Thermal runaway assessments provide insurers with quantitative data about fire spread rates, gas emission levels, and potential damage scenarios specific to each BESS configuration. These evaluations measure how quickly thermal events propagate between cells and modules, helping insurers calculate the probable maximum loss for different failure scenarios.

Assessment methodologies typically include controlled testing of battery modules under various stress conditions, measuring temperature profiles, gas emissions, and fire behaviour. Insurers use this data to model worst-case scenarios and determine the likelihood of total system loss versus partial damage events.

The relationship between assessment results and premium calculations is direct – systems that demonstrate better thermal containment and slower propagation rates typically qualify for lower premiums. Conversely, configurations showing rapid fire spread or high toxic gas emissions may face higher rates or require additional safety measures before coverage is approved.

Coverage decisions and policy terms are heavily influenced by these assessments. Insurers may mandate specific separation distances between battery modules, require enhanced fire suppression systems, or exclude coverage for certain failure modes based on the thermal runaway evaluation results. The assessments also inform emergency response requirements and business interruption coverage calculations.

What specific safety standards and testing protocols do insurers require for BESS projects?

Insurers primarily require compliance with UL 9540A testing standards, which specifically evaluate thermal runaway fire propagation in battery energy storage systems. This standard measures gas generation, fire spread rates, and thermal behaviour under controlled failure conditions to provide standardised risk assessment data.

IEC 62933 standards complement UL 9540A by addressing broader safety requirements for grid-connected energy storage systems, including electrical safety, environmental considerations, and system integration protocols. Many insurers require both certifications to ensure comprehensive risk evaluation.

Required testing procedures include gas emission analysis to identify toxic compounds released during thermal events, fire spread evaluation to determine propagation rates between modules, and thermal mapping to understand temperature distribution patterns. These tests must be conducted by accredited laboratories using representative battery configurations and operating conditions.

Documentation requirements are extensive, typically including detailed test reports, thermal modelling studies, emergency response procedures, and ongoing monitoring protocols. Compliance with these standards directly affects insurance eligibility – projects lacking proper certification may be deemed uninsurable, whilst comprehensive compliance can result in preferential terms and reduced premiums.

Why can’t insurance companies rely on general fire safety measures for BESS coverage?

Battery fires exhibit fundamentally different characteristics compared to conventional fires, making traditional fire safety measures inadequate for BESS installations. Thermal runaway in lithium-ion batteries occurs when temperatures reach their critical thermal threshold, which varies depending on the battery chemistry often ranging from around 130°C for NMC cells to up to 250°C for LFP cells. This reaction can cause fires that spread rapidly and release toxic gases such as hydrogen fluoride (HF) and carbon monoxide (CO), as well as significant volumes of highly flammable gases including hydrogen and methane. Whilst conventional fires consume external fuel sources and can be extinguished by removing oxygen, thermal runaway creates its own oxygen supply through chemical decomposition processes.

Traditional fire suppression systems like sprinklers or foam are largely ineffective against lithium-ion battery fires. Water-based systems may actually worsen the situation by conducting electricity or causing rapid steam generation, whilst chemical suppressants cannot penetrate sealed battery cells where the reaction occurs.

Toxic gas emission concerns represent another critical difference. Battery fires release hydrogen fluoride, which forms hydrofluoric acid when combined with water, along with carbon monoxide and various organic compounds. These emissions require specialised detection equipment and evacuation procedures that exceed standard fire safety protocols.

Specialized risk assessment is necessary because battery fires can reignite spontaneously long after initial suppression efforts. The thermal mass of large battery installations means that internal temperatures may remain elevated for days, creating ongoing re-ignition risks that traditional fire safety planning does not address. This extended risk period requires unique emergency response strategies and business continuity planning.

How do thermal runaway assessments impact BESS project financing and development timelines?

Insurance requirements play a crucial role in project financing decisions, as lenders typically require comprehensive insurance coverage before approving construction or term loans. Thermal runaway assessments directly influence these financing arrangements by determining insurance availability and premium costs, which affect overall project economics.

Assessment results significantly impact loan terms and investor confidence. Projects demonstrating superior thermal safety through comprehensive testing may qualify for lower interest rates and more favourable financing terms. Conversely, systems with concerning thermal runaway characteristics may face higher financing costs or additional security requirements.

Typical timelines for completing thermal runaway evaluations range from 3-6 months, depending on battery configuration complexity and testing laboratory availability. This duration includes initial system design review, laboratory testing of representative modules, data analysis, and final report preparation.

Successful integration strategies involve initiating thermal assessments during early design phases rather than waiting until construction completion. This approach allows design modifications to address any identified concerns whilst avoiding costly retrofits or project delays. We recommend coordinating assessment schedules with equipment procurement timelines to ensure representative samples are available for testing without impacting construction schedules.

Secure Your BESS Project with Expert Thermal Runaway Assessment

Understanding thermal runaway risks and insurance requirements is just the beginning. Your BESS project’s success depends on partnering with specialists who can navigate both the technical complexities and evolving insurance landscape. Don’t let inadequate thermal assessments delay your project financing or increase your insurance costs. Contact our team today to discuss how we can help you develop a comprehensive thermal runaway assessment strategy that meets insurer requirements and protects your investment.