GCube unveils $100m Lloyd’s consortium to support BESS sector

Renewable energy insurance company GCube Insurance has launched a new consortium of six Lloyd’s syndicates to provide battery energy storage system (BESS) developers and asset owners around the world with ‘Class A’ insurance of up to US$100 million.

It should be emphasised that the insurer-led consortium was formed in response to growing demand from brokers and the BESS market.

As larger utility-scale BESS assets with capacities above 100 MW and durations of up to four hours come online, project values ​​and financial risks are likely to increase proportionally.

However, given the rapid pace of technological developments in this sector, there is reportedly a lack of long-term data that could be used to develop risk management strategies and build insurers’ confidence in this new and evolving technology.

Moreover, despite the aspirations of BESS owners and developers, progress has been met with a number of setbacks that often occur early in the project life cycle.

According to a report by GCube, Batteries are not excludedMore than 50% of reported BESS failures occurred within the first two years of operation.

Nevertheless, the launch of the GCube consortium shows that insurers are increasingly realising that the BESS market is taking steps to manage risk.

Fraser McLachlan, Founder and CEO of GCube Insurance, commented: “We have been exploring the development of BESS for the past 12 years and have patiently built on our capabilities. Our BESS Consortium now formalises our significant commitment to the sector. BESS has reached a point of maturity where greater capabilities are required, but the complexity of mitigating loss with evolving technology also requires that these capabilities are well-versed in claims handling and risk selection. This is the foundation on which GCube is expanding its presence in the sector.”

Another key factor to note is that GCube’s agreement with Lloyd’s market capital providers means that brokers from all GCube offices in Europe, the US and Australia have access to ‘full tracking’.

McLachlan added: “These projects are currently growing in size and value and we are pleased to be able to provide additional coverage, as well as lead the development of sustainable conditions based on our extensive experience in the market.”

He concluded: “This experience has been a test as we have managed some of the biggest losses the market has seen, but it was essential to reinvigorate a transparent approach that offers policyholders the best possible support for their projects. BESS is already proving to be an integral part of the global transformation to renewable energy – and our job is to ensure it is a resource the industry can confidently rely on to achieve its goals.”