The Renewable Read | June 7, 2021

June 07, 2021

Battery/Energy Storage Systems Update Part Two

Insurance coverage and cost is a critical component within financial projections for all energy storage projects. Cost and coverage proposals vary widely from domestic and international insurance providers. This variability stems from a small sample size of known losses, and a lack of standardization of asset protection methodology. Most insurance providers struggle to estimate their loss exposure for specific battery-energy storage technologies.

This situation creates challenges for estimating insurance cost and coverage for opportunities that are six to 24 months out on potential project pipelines.

Our clients frequently ask us for insurance cost estimates during this due diligence phase of the energy storage project development cycle. While preliminary, we often ask for the following project information to develop builder’s risk insurance cost estimates:

  • Approximate project asset values
  • Estimated annual revenues – including separate revenue sources
  • Project type (indoor vs. outdoor, occupied building vs. container)
  • Project location/address and project site map – if available at this development stage
  • Project schedules – Gantt charts including time allowance for unknown variables
  • Technology used for primary project components (BESS, inverters, transformers, etc.)
  • Physical asset protection features – if available at this development stage

Your answers enable us to work with underwriters to help develop coverage and pricing indications for each project. The caveat is that pricing and coverage can and do change during the length of time between the estimate and project notice to proceed (LNTP or NTP).

As the development process continues, we will work to secure builder’s risk insurance coverage as your projects begin construction. Ultimately, this approach is taken to assist you in achieving your insurance coverage and pricing goals within the financial projections of your business plan.

Mark Mirek Mark Mirek serves as a strategic advisor within the energy storage space. He draws upon his seven years of experience with utility scale energy storage systems. Mark currently serves as a voting member on the NFPA 855 technical committee. NFPA 855 is the global asset protection standard for energy storage systems. Mark is the only insurance broker representative on the NFPA 855 technical committee.

Mark Mirek has more than 25 years of industry experience in the traditional power, renewable energy, and utilities space. Mark joined the Beecher Carlson Energy practice in 2010 and currently serves as Senior Managing Director. He helped build the energy practice through providing technical thought leadership, critical engineering services, and insurance placement services.