This consortium, formed in response to increasing demand from brokers and the broader BESS market, includes six Lloyd’s syndicates.
Larger utility-scale BESS assets, with capacities exceeding 100MW and durations of up to four hours, have begun to come online, leading to a significant rise in project values and financial risks. However, the rapid technological advancements in the sector have not been matched by sufficient long-term data to inform risk management strategies and build underwriters’ confidence in this emerging technology. Furthermore, BESS owners and developers often face problems early in the project lifecycle, with GCube reporting that 50% of BESS failures occur within the first two years of operation.
The creation of GCube’s consortium signifies a growing recognition among underwriters of the proactive measures being taken by the BESS market to manage these risks.
Fraser McLachlan, Founder & CEO of GCube Insurance, stated: “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 within the Lloyd’s market ensures that “full follow” capacity is accessible to brokers from all its offices in Europe, the USA, and Australia. 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.”
Reflecting on the challenges and experiences in the sector, McLachlan concluded: “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 objective.”
Source: Reinsurance News
