Lithium-Ion Batteries Strain Risk Management
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.
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.
“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.”
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.