Tackling BESS Safety Risk – Key to Firming VRE Capacity

My article published in the April Newsletter of the Global Smart Energy Federation.

This article focuses on Battery Electrical Energy Storage Systems (BESS) which currently holds the commercial lead (notwithstanding progress in other technologies) in the grid’s need for distributed energy storage architecture. Today, it is a preferred choice to firm-up large-scale distributed Wind/Solar PV (collectively termed as VRE).

 Wind and Solar PV plants have reached a build-scale today that has been unparalleled in the last 10 years. This build-scale is huge in all aspects of its value chain i.e. (1) larger unit sizes, (2) faster manufacturing and delivery, (3) shorter construction time, and (4) project capital efficiencies. For this, we need to thank the OEMs and EPC contractors who have enabled this. This transformation has reduced project finance risk to fund bigger projects.

 A few Solar PV plants in Saudi Arabia (KSA) are now around 1.0 GW each, installed in about 24 months. These plants are equipped with the most sophisticated tracking and water-less panel cleaning mechanisms to improve operating efficiency. Now UAE, India, China, and others are following with such large design-build concepts. In tandem, these countries have implemented (or implementing) very aggressive EHV transmission build to evacuate large power from remote VRE locations to far away urban load centers.

 The creation of such large VRE locations has also created challenges for the grid operator. In a panel that I moderated at the India Smart Utility Week 2024 in March this year; it was mentioned that India’s western region VRE locations have created large power swings (of up to 7,000 MW) during cloud travels in that area. Thus, if there is no rotating inertia nearby, then other compensatory mechanisms like STATCOMS and standby thermal generation must be deployed to overcome this. Sizable energy storage at these VRE locations could come in handy.

 In a T&D World/ Energizing Today article of Feb 27, 2024, titled “Report: Over 50% of BESS Failures Occur Within 2 Years of Operation, but Insurers Ready to Back the Sector”, states that publicly available data (over 12 years) and insights from global underwriting teams, suggests that:

1.       More than 50% of BESS failures occur within the initial two years of operation

2.       Failures in BESS have seen a tenfold increase since 2016

3.       5-50 MWh BESS account for over half of total failure events globally

4.       48% of failures have been linked to solar-plus-storage projects

 The Report goes on to state that, “while the above statistics broadly align with industry growth, there is concern that these failure trends may persist as the market deploys larger 100MW+ utility-scale assets, leading to increased financial losses for owners, developers, and insurers. This concern arises from a recurring pattern in rapidly expanding market segments, where new technologies often face challenges related to quality control – a dynamic recently observed in the offshore wind market”. The Report also identifies potential thermal runaway in transit and cargo movement, due to the absence of established shipping and packaging standards.

 Despite the above emerging trends, the Report emphasizes underwriters' increasing recognition of this sector's importance to the energy transition and their willingness to support its critical scaling up. As BESS assets' share in global renewable energy portfolios rises, these technologies will comprise up to 30% of its insured portfolio (by asset value), by the end of 2024.

 Following a series of fires at three BESS locations in New York State in 2023, the NY State Governor constituted an inter-agency Fire Safety Working Group (WG) to address safety concerns around lithium-ion BESS comprising representations from (a) Homeland Security and Emergency Services; (b) Fire Prevention and Control; (c) New York State Energy Research and Development Authority (NYSERDA); (d) State Department of Environmental Conservation; (e) Department of Public Service; and (f) leading BESS safety experts (national labs and consultants). This WG has prepared a “Draft Fire Code Recommendations - Issued for Comments”, dated February 2024, whose recommendations can be summarized below (duly paraphrased):

 1.       Fire Code Updates: (a) Industry funded “peer reviews” to assist authorities in their review of BESS permits & Fire Code compliance; (b) Expand “explosion control” areas to include BESS cabinets, rooms and walk-in units; (c) Availability of owner/operator qualified personnel for dispatch within 15 minutes and able to arrive within four hours to support emergency responders; (d) Monitoring of BMS data 24/7 at a Network Operations Center; (e) CCTV monitoring as a record for post-event analysis; and (f) Remove code exemption for utility owned/operated BESS (to ensure uniform compliance).

 2.       Fire Code Additions: (a) Emergency Response Plan and annual local first responder training at every BESS location; (b) Monitoring of fire detection systems by a central station service; (c) mandated fire stops for all BESS enclosure penetrations including inter-units (d) mandated industry-funded special inspections; and (e) inclusion of all cabinets in Fire Code requirements.

 3.       Additional Considerations: (a) Requirement for post-event Root Cause Analysis (RCA); (b) guidance for water supply and its appropriateness for different BESS technologies; and (c) Code Council to discuss clearances between oil-insulated equipment and BESS units.

 While this draft document is open for comments, the above recommendations are substantive and perhaps expresses deep frustration with the industry. It is not clear how the stakeholders (developer, owner, operator, utilities) will react to this. While the above is restricted to NY State, other jurisdictions could follow suit.

 In other examples, there were multiple BESS fires & explosions in 2019 (causing injuries and one death to first responders) in South Korea, where little information is available. There was another major fire/explosion in 2019 at an Arizona Public Service BESS site near Phoenix, USA, injuring several first responders. Earlier this week (May 2, 2024), a BESS fire incident in Neermoor, Germany (near Bremen), saw a thermal runway fire that injured two first responders (a design that was touted as having very good safeguards (“highest quality cells and several layers of risk engineering”).

 Addressing fire risks requires design/operational data and insights on failure modes. However, this is not forthcoming from the OEMs (citing legal and competitive confidentiality). It may be fair to state that all major global utility BESS fires in the past 15 years could not be analysed conclusively by external experts due to confidentiality. This opaqueness does not bode well for the industry. In the past, the utility industry and the OEMs have always shared best practices till the coming of VRE technology, where critical subsystems have become “black boxes”.

 Not addressing BESS fire-risk could create insurance barriers for the development of large-scale PV and Wind plants which are now being integrated with on-site BESS units. Today, most VRE projects are bid on a 24/7 dispatchable power basis, requiring larger BESS units. This increasing demand for BESS in the renewable energy market will likely run into insurance headwinds if fire-risks are not mitigated.  

 In my view while the OEMs figure out their design problems, the developers and utilities should voluntarily agree on a few standards that will address the “discomfort” in the Fire Code. These include creating standards in (a) spacing between modules and amongst units; (b) in-house call-directory of experts reachable by fire authorities; (c) a critical examination and consensus around a good BMS standard; and (d) sharing operational events, issues, concerns, and remedies annually, at a closed-door in-camera meeting. In fact, similar approaches were taken in the 1980s/1990s with regards to PCB-oil fire hazards in transformers and breakers along with first-responder safety zones for large power assets.

 I fear that not paying collective attention to BESS fires, could abruptly bring a halt to its market growth by the insurance industry. This risk is uniform across Tier-1 and Tier2 suppliers as well.  All this while the VRE industry is booming