Alternative Energy

Lithium-Ion Batteries Strain Risk Management

The Fire Department of New York is concerned about grid storage safety.
By: | August 1, 2017 • 3 min read

New York City is agressively adding solar capacity. But the risks of energy storage must be addressed.

In September 2016, New York City committed to an ambitious program of solar energy and storage. The plan calls for 100 MWh of energy storage by 2020 and 1 GW of solar capacity by 2030. Photovoltaic technology is well established, but the lithium-ion (Li-ion) battery technology used to store the collected energy is much more fraught. Within weeks, the Fire Department of New York expressed concerns about retrofitting commercial- and industrial-scale batteries, called grid storage, into the density of the city.

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In January 2017, underwriters with FM Global issued an 18-page data sheet with loss-prevention recommendations for Li-ion installations. Some specialty insurers have been willing to underwrite standalone Li-ion grid storage, others so far have only been willing to cover such installations as part of a broader property policy for a renewable-energy generation facility or power plant.

“We think we can come up with schemes that will provide reasonable levels of protection now and in the future.” — Gary Keith, vice president, engineering standards manager, FM Global.

Li-ion batteries power cell phones, tablet computers, and some electric cars. They are compact, dense, and represent the leading edge of storage efficiency. Those same characteristics make them prone to runaway overheating if there is a short or damage to a cell. There have been notorious examples of burning devices and even vehicles in recent years.

There have also been fires at grid storage installations. The most notable was a 2012 incident in Hawaii. A 15 MW grid storage array with 12,000 cells was destroyed by fire at the 30 MW Kahuku wind farm on Oahu.

Li-ion grid storage “in conjunction with wind or solar provides stability into the grid as well as peak performance,” said Charles Long, area supervisor for energy at brokerage Arthur J. Gallagher.

Gary Keith, vice president, engineering standards manager, FM Global

“For some underwriters, grid storage is literally too hot to handle. Others are willing to quote but very selectively. For a large utility the insurers will pick it up no worries, but for a phone-battery maker looking to move up to grid storage, they would find a lot of resistance in the market.”

Long emphasized that the big issue for grid storage is not the value of the battery but the potential for business interruption.

“The BI is usually significantly higher than the property. If a 200 to 300 MW wind farm loses its grid-storage, that may be $20 million to replace the battery but a $40 million BI loss if the power-purchase agreement mandates battery backup.”

Gary Keith, vice president engineering standards manager at FM Global, said that with the proliferation of microgrids and grid storage, it was important for his firm to issue the data sheet as soon as it could.

“We are going to see more and more mandates for this type of storage. Power generation is one aspect of the issue, but our motivation for the data sheet was usage expanding to independent power availability in commercial and industrial applications.”

There are two key points, Keith stressed.

“The fire hazard is from a short or damage that causes a runaway chemical reaction, not from the ambient heat of operation. Also, Li-ion is not lithium metal [which reacts violently with water]. We recommend sprinkler protection, and separation, at least 20 feet from any other structure or exposure.”

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While the proliferation of microgrids and grid storage represents a clear emerging risk, “the technology is not outside current fire codes and practices,” said Keith at FM Global.

“We think we can come up with schemes that will provide reasonable levels of protection now and in the future.”

That future looks very big. According to the University of Michigan Center for Sustainable Systems, as of June 2016, the U.S. had more than 21.6 GW of rated power in energy storage compared to 1,068 GW of total in-service installed generation capacity. Globally, installed energy storage totaled 150 GW.

Only 2.5 percent of delivered electric power in the U.S. is cycled through a storage facility. For comparison, that figure is 10 percent in Europe and 15 percent in Japan. U.S. energy storage projects increased by 105 percent from 2013 to 2016. California leads with 149 operational projects (4.03 GW), followed by Virginia with 3.25 GW and Texas with 24 projects.

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Wawa’s Director of Risk Management knows that harnessing data and analytics will be key to surviving the rapid pace of change that heralds new risk exposures.
By: | July 27, 2017 • 5 min read

R&I: What was your first job?

My first job was at the age of 15 as a cashier at a bakery. My first professional job was at Amtrak in the finance department. I worked there while I was in college.

R&I: How did you come to work in risk management?

A position opened up in risk management at Wawa and I saw it as an opportunity to broaden my skills and have the ability to work across many departments at Wawa to better learn about the business.

R&I: What is the risk management community doing right?

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The advancements in analytics are a success for the industry and offer opportunities for the future. I also find value in the industry focus on emerging and specialty risks. There is more alignment with experts in different industries related to emerging and specialty risks to provide support and services to the insurance industry. As a result, the insurance industry can now look at risk mitigation more holistically and not just related to traditional risk transfer.

R&I: What could the risk management community be doing a better job of?

Developing the talent to grow with the industry in specialization and analytics, but to also carry on the personal connections and relationship building that is a large part of this industry.

Nancy Wilson, director, quality assurance, risk management and safety, Wawa Inc.

R&I: What was the best location and year for the RIMS conference and why?

I have had successes at all of the RIMS events I have attended. It is a great opportunity to spend time with our broker, carriers and other colleagues.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I think the biggest challenge facing most companies today is related to brand or reputational risk. With the ever-changing landscape of technology, globalization and social media, the risk exposure to an organization’s brand or reputation continues to grow.

R&I: What emerging commercial risk most concerns you?

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The changing consumer demands and new entrants into an industry are concerning. This is not necessarily something new but the frequency and speed to which it happens today does seem to be different. I think that is only going to continue. Companies need to be prepared to evolve with the times, and for me that means new risk exposures that we need to be prepared to mitigate.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

I try to be optimistic about most things. I think the economy ebbs and flows for many reasons and it is important to always keep an eye out for signs of change.

R&I: What have you accomplished that you are proudest of?

I am fortunate to have opportunities professionally that make me proud, but I have to answer this one personally. I have two children ages 12 and 9 and I am so proud of the people that they are today. They both are hardworking, fun and kind. Nothing gives me a better feeling than seeing them be successful. I look forward to more of that.

R&I: What is your favorite book or movie?

This is really hard as there are too many favorites. I do prefer books to movies, especially if there is a movie based on a book. I find the movie is never as good. I have multiple books going at once and usually bounce back and forth between fiction and non-fiction.

R&I: What’s the best restaurant you’ve ever eaten at?

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I have eaten at a lot of different restaurants in many major cities but I would have to pick Horn O’ Plenty in Bedford, PA. It is a farm to table restaurant in the middle of the state. The food is always fresh and tastes amazing and they make me feel like I am at home when I am there. My family and I eat there often during our trips out that way.

R&I: What is your favorite drink?

I do love a good cup of coffee (working at Wawa helps that). I also enjoy a good glass of wine (red preferably) on occasion.

R&I: What is the most unusual/interesting place you have ever visited?

Vacations aside, I do get an opportunity to travel for work and visit our food suppliers. The opportunities I have had to visit back to the farm level have been a very interesting learning experience. If it wasn’t for my role, I would have never been able to experience that.

R&I: What is the riskiest activity you ever engaged in?

My husband, kids and I recently did a boot-camp-type obstacle course up in the trees 24 feet in the air. Although I had a harness and helmet on, I really put my fear of heights to the test. At the end of the two hours, I did get the hang of it but am not sure I would do it again.

R&I: If the world has a modern hero, who is it and why?

The first people that come to mind are those who are serving our country and willing to sacrifice their own lives for our freedom.

R&I: What about this work do you find the most fulfilling or rewarding?

Every day is different and I have the opportunity to be involved in a lot of different work across the company.

R&I: What do your friends and family think you do?

My husband and children have a pretty good sense of what I do, but the rest of my family has no idea. They just know I work for Wawa and sometimes travel.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]