Why is insurance the cornerstone for reducing the investment and financing  risks of energy storage systems?

　　In a recent article published by Charley Grimston, co-founder of specialist  insurance firm Altelium, analysis-driven decisions are not only applicable to  the operation and optimization of battery energy storage systems, but are also  critical to underpinning the long-term success of the battery energy storage  industry. Altelium is an insurtech business, while Grimsto is a member of the  British Standards Institution (BSI) committee that sets industry standards for  the safe and environmentally friendly handling of battery packs and modules in  the UK.

　　A: Insurance affects almost every aspect of the energy storage market

　　Insurance has always been the cornerstone of securing business growth in  various industry markets. Providing insurance for lithium-ion battery energy  storage systems is a sign that they can be supported, understood, and assessed  for risks.

　　Lithium-ion battery energy storage systems can provide insurance services  beyond the original manufacturer's stated validity period, and will provide  battery products with quality assurance and bank guarantees, which will allow  the battery energy storage market to grow and mature. Therefore, it plays a  vital role in the development of the battery energy storage market.

　　In addition to this role in helping to obtain capital or deduct risks and  financial liabilities from a business's balance sheet, insurance can also play a  key role in helping to achieve environmental, social and governance (ESG) goals.  In the process, it also helps address and overcome some of the industry's key  challenges, such as confidence in battery life cycles and fire safety risks.

　　This is because new climate change regulations also require access to the  information and technology needed for insurance, such as risk due diligence and  risk mitigation. The process can also interface with practices related to  on-site planning, design, and operations, and can ultimately play an important  role in reducing fire risk, especially if Operational All Risks (OAR) insurance  is purchased for energy storage systems.

　　The global standard for corporate climate-related financial reporting is  the framework of the Task Force on Climate-related Financial Disclosures (TCFD).  With the support of G7 and G20 national organizations, more than 2,200  organizations formally supported reporting aligned with the Task Force on  Climate-related Financial Disclosures (TCFD).

　　B: Understand the risk of getting a reward

　　Likewise, a periodic analysis of carbon emissions must be performed at  every stage of energy storage system development (from the first stage of  product production to the last stage of end-of-life) in order to calculate the  carbon output. We need to understand the manufacturing process and battery  chemistry, and understand the best operating plans and procedures for energy  storage systems.

　　That's why insurers specializing in batteries are so important to the  future of the energy storage market, as few have the ability to have a deep  understanding of these battery technologies, or the ability to process and apply  the battery data needed, let alone mitigate risk, premiums that provide real  value and meaningful terms.

　　While energy storage developers want to ensure a good ESG rating for their  stakeholders, investors and customers, the metrics and processes involved can  play an important role in mitigating risk, improving operational safety, and  improving profitability.

　　Insurers will also review design plans, including heating and ventilation,  gas detection and fire detection systems such as thermal imaging cameras, as  well as water management, unit spacing and blast walls, which will all be part  of good risk mitigation and planning.

　　C: Partnering with insurance providers

　　Of course, lenders and borrowers have a mutual interest in ensuring that  projects are properly protected from the associated risks. The better a battery  energy storage system is designed and operated, the more favorable the insurance  terms, and arguably the more sustainable and ranked this asset will perform on  any ESG framework.

　　By developing good working relationships and sharing knowledge with  insurers who are custodians of widely applied battery knowledge and experience,  the energy storage market will benefit from this expertise through improved  premiums and services.

　　The process that insurance companies use to assess risk is divided into two  layers. Begin by checking the reference data of the batteries involved to  understand the electrochemical and electrical architecture within the battery  energy storage system. The second tier is looking at operational data from the  field to understand how the asset was designed and built and how it is managed -  checking and maintaining systems in place.

　　SES Power's square aluminum shell lithium iron phosphate battery (single  100Ah-280Ah) products and special lithium iron phosphate batteries that can work  at -40 degrees Celsius all purchase global product insurance, which is more for  batteries or ordinary lithium battery pack. For the high-value and highly  complex integrated lithium battery energy storage system, ordinary lithium  battery product insurance has been unable to fully and effectively protect the  interests of various stakeholders. If the related insurance business of lithium  battery energy storage system can become a standard or a default rule in the  industry, it will strongly promote the development of the energy storage system  industry.