Originally posted on Power

Energy storage technologies have become more important to the power generation sector, in part because of their ability to support the deployment of renewable energy resources. Battery energy storage systems, or BESS, enable renewable resources such as solar and wind power to be stored for when that electricity is needed. Storage systems help balance the power grid, which is critical as demand for electricity increases and more intermittent renewable energy is added to the power transmission and distribution system.

Jason Kaminsky, CEO of kWh Analytics, a group that provides data analytics and more for the solar power industry, recently provided POWER with his insight about the need for energy storage to help support the growth of renewable energy. Kaminsky’s company, a climate insurer for renewable energy assets, helps project developers and others better understand the risks and rewards associated with renewable energy projects.

Kaminsky in a recent LinkedIn post provided his take on what the incoming Trump administration means for renewable energy, saying there could be headwinds for residential solar and offshore wind, but utility-scale solar and storage development will likely remain relatively stable. Kaminsky, agreeing with many other analysts, said there likely will be negotiation around the tax credits for solar and wind power in the Inflation Reduction Act.

Tariffs could impact supply chains, though the renewable energy industry has been “resilient and dynamic in the face of years of prior tariffs,” according to Kaminsky. He said regulatory reform could lead to easier permitting of projects, supporting construction of new infrastructure.

“It’s essential that we continue to strive toward more resilient assets, not only for financial risk management but also to continue to demonstrate that we can satisfy many more renewable assets on the grid and have it not only be cleaner but also more reliable,” said Kaminsky.

POWER: How do you perceive the overall current market for energy storage?

Kaminsky: The utility-scale BESS (battery energy storage systems) market has experienced explosive growth, with global capacity skyrocketing from 12 GW in 2021 to over 48 GW in 2023. The global BESS sector saw a 60% increase in installed capacity of grid-scale batteries between 2020 and 2021. According to a Lloyds article in the 2024 Solar Risk Assessment, BESS installations are expected to expand by 13 times in the coming years, with an additional 181 GW of capacity either planned or under construction. The intermittency of renewable energy sources like wind and solar power has created a pressing need for storage capabilities to balance irregular supply with demand. BESS offers crucial grid stabilization services and enables the delivery of more clean energy.

POWER: Are there innovative new technologies (battery chemistries, etc.) that will impact the market in the next few years?

Kaminsky: While there are many exciting emerging chemistries and technological improvements being worked on today, lithium-ion batteries currently dominate the standalone utility-scale ESS market. In the near term our main focus is LFP (lithium iron phosphate battery, known as LiFePO 4, or LFP—lithium ferrophosphate) for this reason. But even so, we continue to evaluate and insure new chemistries and innovations, especially those that bring improvements to safety and cost. To give an example, vanadium flow batteries are in the market today and have demonstrated improved safety. Aside from chemistry, the insurance industry is keenly interested in battery analytics firms that can easily plug into the BMS (battery management system) to provide warranty compliance tracking, advanced anomaly detection, and to help pinpoint issues down to the cell level before they cause damage.

POWER: Is your company working on any energy storage projects, or has your company recently brought any storage projects online (either standalone or as part of a renewable energy or grid/substation installation)?

Kaminsky: As a leading provider of climate insurance for zero carbon assets, kWh Analytics is able to underwrite up to $75 million per renewable energy project location, and has full delegated authority to cover accounts compromising up to 100% of operational solar and/or BESS projects. We take a data-driven approach to meeting the renewable energy market’s needs with innovative solutions, incentivizing resilience to bridge the protection gap. Our focus is on collaborating with project developers, operators, and other stakeholders to mitigate risks and enhance the overall resilience of renewable energy installations. By providing comprehensive insurance coverage, we aim to reduce financial uncertainties and encourage greater investment in the sector.

POWER: What are the major challenges impacting the energy storage market and deployments of energy storage?

Kaminsky: The rapid growth of BESS brings unique challenges, particularly in safety and risk management, which can in turn impact the ability to insure BESS installations. Insurance is not only a cost of doing business, but also a necessary form of capital for the continued growth and adoption of the technology. However, historical losses have made insurers cautious; they’ll be paying close attention to how the evolving BESS risks are being managed. There will need to be a strong focus on fire safety, thermal management, and system integration to address the unique risks associated with these deployments and ensure their long-term viability.

The industry has demonstrated resilience in overcoming challenges, with the joint efforts of developers, brokers, and insurers leading to safer projects. Ultimately, as BESS becomes more central to our energy infrastructure, its long-term viability depends on the industry’s ability to mitigate risks and ensure safe, reliable operations.

As the industry continues to grow, so too will the scrutiny from regulators, insurers, and the public. Keeping up with evolving best practices will be essential not only for ensuring the safety and reliability of BESS installations but also for maintaining public trust and investor confidence in the technology. Operators who prioritize resilience and embrace safety and risk management strategies will be better positioned to secure favorable insurance coverage and ensure BESS continues to play a vital role in our clean energy future.

—Darrell Proctor is a senior editor for POWER.