GCube backs BESS sector growth with a new $100mn Lloyd’s Consortium
GCube-led BESS consortium, backed by six Lloyd’s syndicates, will provide battery energy storage sector with an experienced market leader, drawing on 25+ years of renewable energy insurance expertise
GCube Insurance (GCube), a leading underwriter for renewable energy projects, has today announced the launch of a new consortium, comprised of six Lloyd’s syndicates, to provide battery energy storage system (BESS) developers and asset owners worldwide with up to USD 100m of ‘A-rated’ insurance capacity.
The underwriter-led consortium, launched in response to increasing demand from brokers and the BESS market, will bring much-needed lead capacity and expertise to support the industry as it scales up to become an integral part of the global energy mix.
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. 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.
Despite the bullish aspirations of BESS owners and developers, progress has been met with setbacks, and these often come early in the project lifecycle. As GCube’s “Batteries not Excluded” report articulates, more than 50% of reported BESS failures have occurred within the initial two years of operation. Nonetheless, the launch of GCube’s consortium illustrates growing recognition among underwriters that the BESS market is taking action to manage its risks.
It also reflects an understanding that, to underpin the sector’s growth, it is vital to ensure that capacity is backed up with robust underwriting and claims-handling expertise from long-term experience in this evolving field.
Fraser McLachlan, Founder & CEO, GCube Insurance, said: “We have been studying developments in BESS and patiently increasing our capacity over the last 12 years. 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.”
GCube’s arrangement with capital providers in the Lloyd’s market makes ‘full follow’ capacity accessible to brokers from all its offices in Europe, in the United States, and in Australia. Through the consortium, GCube 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.”
