Renewable energy project underwriter GCube Insurance (GCube) has announced the formation of a new consortium.
This group, comprising six Lloyd’s syndicates, aims to provide battery energy storage system (BESS) developers and asset owners globally with up to $100 million in ‘A-rated’ insurance capacity.
The consortium, led by underwriters, was developed as a response to the growing demand from brokers and the BESS market. It is designed to offer the necessary lead capacity and expertise to support the industry as it becomes a key component of the global energy mix.
With larger utility-scale BESS assets coming online, capacities of 100MW and durations of up to 4 hours are becoming standard. This has increased project values and financial risks. However, due to the rapid technological advancements in the sector, GCube noted that there is a lack of long-term data to guide risk management strategies and build underwriters' confidence in this emerging technology.
GCube’s report, “Batteries not Excluded,” highlights that over 50% of reported BESS failures occur within the first two years of operation. Despite these challenges, the launch of GCube’s consortium indicates a growing recognition among underwriters that the BESS market is actively managing its risks.
This move also underscores the need for robust underwriting and claims-handling expertise to support the sector's growth. Fraser McLachlan (pictured above), founder & CEO of GCube Insurance, stated that GCube has been increasing its capacity over the last decade.
“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,” McLachlan said.
The consortium’s arrangement with capital providers in the Lloyd’s market also makes ‘full follow’ capacity available to brokers from GCube’s offices in Europe, the United States, and Australia.
McLachlan further noted that as BESS projects grow in size and value, GCube is prepared to offer additional coverage and guide the development of sustainable terms and conditions based on its extensive market experience.
“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,” McLachlan said.
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