BESS consortium led by GCube and backed by six Lloyd’s syndicates will provide up to $100m in capacity for any single project across construction and operation.
GCube Insurance, a renewable energy insurance specialist, has announced the launch of a new consortium, comprised of six Lloyd’s syndicates.
The consortium aims to provide battery energy storage system (BESS) developers and asset owners worldwide with up to $100m of ‘A-rated’ insurance capacity.
The underwriter-led consortium, launched in response to increasing demand from brokers and the BESS market, will bring lead capacity and subject matter expertise to support the industry as it scales up to become an integral part of the global energy mix. GCube said.
As larger utility-scale BESS assets start to come online with capacities of 100MW upwards and durations reaching up to 4 hours, project values – and financial risks - have increased proportionally, the company said.
However, given the fast pace of technological evolution in the sector to date, there remains a shortage of long-term data to inform risk management strategies and build the confidence of underwriters in this new and emerging technology, GCube explained.
Despite the bullish aspirations of BESS owners and developers, progress has been met with setbacks, the firm said, and these often come early in the project lifecycle.
GCube’s “Batteries not Excluded” report noted that a majority of reported BESS failures have occurred within the initial two years of operation.
Despite this, GCube said the launch of its consortium illustrates “growing recognition” among underwriters that the BESS market is taking action to manage its risks.
“We have been studying developments in BESS and patiently increasing our capacity over the last 12 years,” said Fraser McLachlan, founder & CEO of GCube Insurance.
“Our BESS consortium now formalises our significant commitment to the sector.
“BESS has reached a point of maturity where more and more capacity is required, but the complexity of mitigating losses with evolving technology also requires this capacity to be well-versed in handling claims and selecting risks. This is the basis for GCube expanding its presence in the sector,” he added.
GCube’s arrangement with capital providers in the Lloyd’s market makes ‘full follow’ capacity accessible to brokers from its offices in Europe, the US and Australia.
GCube said that via the consortium it is “positioning itself to take a lead position in setting sustainable terms and pricing”.
McLachlan added: “These projects are now growing in size and value, and we are pleased to be in a position to provide additional coverage, as well as to guide the development of sustainable terms and conditions based on our extensive experience in the market.
“This experience has been testing, having handled some of the largest losses the market has seen, but it has been necessary for galvanising a transparent approach that offers insureds the best support available for their projects. BESS is already proving itself to be an integral part of the global transition to renewable energy – and it is our job to ensure that it is an asset the industry can confidently rely on to meet its objectives.”
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