Lithium-ion (Li-ion) batteries are the predominant type used for BESS in the United States. Different Li-ion chemistries exist and may be chosen based on the balancing of needed energy density, thermal stability, battery life and cost:
Incorporating battery energy storage solutions into your business operations in a safe, scalable, financially viable way requires that stakeholders successfully navigate the associated challenges. Before adopting BESS Technology, careful consideration should be given, at a minimum, to:
In addition, three overarching industry concerns to keep in mind when considering if and which BESS is right for your business include:
Graphite, lithium, cobalt and nickel – important minerals for battery production – are predominantly sourced overseas. This can create cost, transportation and political challenges – although incentives provided in the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS Act may help alleviate some of these pain points.
65% of flake GRAPHITE is mined in China, where labor and environmental conditions are typically not up to U.S. standards.4
75% of LITHIUM resources are found in Argentina, Chile and Bolivia, commonly referred to as the Lithium Triangle.4
65% of COBALT production occurs in the Democratic Republic of Congo.4
50% price increase following Indonesia’s 2014 ban on NICKEL exports, with similar international policies often causing price volatility for this resource.4
Fires can be caused by temperature, cell defects, damage during installation, operational issues and lack of maintenance.
One unique BESS hazard is battery fire and/or explosion caused by thermal runaway, or the rapid uncontrolled release of energy from a battery cell. Thermal runaway can be caused by an internal short circuit, which can be caused by mechanical, thermal or electrical damage to the battery before, during or after installation.
Some chemicals used to make batteries may be hazardous. Even when the best safe handling practices are followed, accidents can happen – and any damage caused during the manufacturing, transportation or disposal process can expose people working or living in or near a BESS facility to harmful gases or pollute the surrounding soil and groundwater.
Thermal runaways require a significant amount of water to cool and control. Potentially hazardous chemicals released during the fire can pollute the water used to fight it, contaminating any soil or groundwater absorbing the runoff.5 Fumes released can also be a risk to the public and first responders.
Managing BESS-related risk depends on planning, preparation and having a trusted, experienced partner. With a dedicated team of energy experts and Claim specialists, Travelers has been providing specialized coverage and risk control solutions to support owners and operators in the rapidly growing renewables industry for over 30 years.
To learn more, visit Travelers Insurance for the Renewable Energy Industry or contact your agent today.
Sources:
1 EIA projects that renewable generation will supply 44% of U.S. electricity by 2050, U.S. Energy Information Administration, March 18, 2022. - https://www.eia.gov/todayinenergy/detail.php?id=51698
2 Bloomberg New Energy Finance (BNEF), 2019 Long-Term Energy Storage Outlook, Bloomberg NEF, New York, 2019 – as cited in Energy Storage Grand Challenge: Energy Storage Market Report, U.S. Department of Energy, December 2020, pg. 17. - https://www.energy.gov/sites/prod/files/2020/12/f81/Energy%20Storage%20Market%20Report%202020_0.pdf
3 U.S. battery storage capacity will increase significantly by 2025, U.S. Energy Information Administration, Dec. 8, 2022. - https://www.eia.gov/todayinenergy/detail.php?id=54939
4 The Critical Ingredients Needed to Fuel the Battery Boom, Visual Capitalist, Oct. 26, 2016. - https://www.visualcapitalist.com/critical-ingredients-fuel-battery-boom/
5 Lithium-Ion Battery Energy Storage and Emerging Risks for Business, Travelers.com. - https://www.travelers.com/resources/business-industries/energy/lithium-ion-battery-energy-storage-emerging-risks-business