Lockton Associates from the Energy & Power team had the opportunity to brief John Milne MP ahead of a parliamentary debate held in the House of Commons, on 5 June 2025. Discussions focussed on safety regulations for battery energy storage systems (BESS), and the role of the insurance industry in enforcing standards. The article below delves into the various issues explored during the House of Commons debate.
Over 30GWH of BESS site capacity (opens a new window) was submitted for planning application in the UK during 2024, adding to the existing 8GWh of capacity already online (opens a new window). However, planning approval requirements and safety standards may vary considerably by jurisdiction — both internationally and domestically. This can create deviation between projects as a result; potentially inviting risk.
To fill this void, the insurance industry leverages its experience with BESS projects to ensure robust alignment with internationally recognised safety standards for all projects.
How do underwriters understand and assess risks?
When underwriting a BESS project, insurers will ask developers the following questions:
What is the chemistry of the battery cells?
Is the spacing between containers adequate to avoid spread of fire if thermal runaway occurs?
Is the quality of workmanship in manufacturing and installation of a suitable standard?
Have the cell manufacturers conducted the appropriate cell tests?
Have soil and ground conditions been appropriately studied and documented in hydrology and geotechnical reports?
Current preferred safety standards
Globally, carriers have largely adopted the following safety standards of Underwriters Laboratories (UL), International Electrotechnical Commission (IEC), and National Fire Protection Association (NFPA) as their minimum requirement for BESS:
NFPA 855
UL 1973
UL 9540
UL9540A
IEC 62933
IEC 62619
Standards are consistently changing as technological innovations present themselves. In particular, UL participates (opens a new window) and conducts numerous standards panels and working groups to help testing, certification, and standards keep pace with developments in this space.
In the UK, while there are currently no specific regulation/laws to govern BESS, the Department for Energy Security and Net Zero does offer guidance (opens a new window) to developers. However, authorisation for new BESS sites can hinge on planning approval — a process which is imprecise and varies across devolved nations. Typically, the burden of responsibility falls on individual local authorities to grant planning permissions — bodies with little to no experience or training in the assessment of BESS developments. This can result in inconsistencies in BESS sites between different regions and counties, which may invite risk.
It is important to note that safety standards are largely attributable to original equipment manufacturers (OEMs), not the project development. Insurers are best placed to enforce consistency and best practice regarding safety standards, due to their specialisation and experience in assessing the risk of such projects across the world.
Continuous evolution in technology and best practices
The standards for BESS construction constantly evolve to reflect technological advancements and latest know-how. Therefore, it is crucial that any possible future regulation does not enforce outdated practices and inhibit development within the industry.
For example, nickel magnesium cobalt (NMC) was the preferred chemistry in the early days of utility scale BESS, but it is now rarely used on new projects. Most insurers will assess NMC batteries as higher risk than lithium ferro phosphate (LFP). LFP is preferred for battery chemistry as they exhibit better chemical and thermal stability, a longer lifespan, and are cheaper than NMC batteries — and correspondingly, 80% of utility scale BESS (opens a new window) is now LFP.
Additionally, the insurance industry is also grappling with the fact projects built in the previous two years are considerably less risky than those built 10 years ago, as the current safety standards didn’t apply when those projects were built.
For example, insurance professionals recognise that the specific (opens a new window) and unique profile of some older BESS sites can significantly contribute to the spread of fire. The technology and designs deployed a decade ago are very different from what is recommended today. Adherence to evolving standards may also necessitate augmentation or retrofit of current sites as insurers reassess the risk of older sites based on latest best practice.
What role does the insurance industry play in enforcing safety standards?
Insurers will mandate adherence to the safety standards of UL, IEC, and NFPA — making these standards the backbone of insurability. Ostensibly, BESS projects achieving these standards will be perceived as a more insurable and less risky asset.
The insurance industry has already played a pivotal role in forming the standards for BESS sites, and remains committed to a proactive approach in continuing to shape these in the future too. If BESS developers are unable to satisfy the required safety criteria, they will subsequently struggle to secure insurance for their BESS project. Without insurance, developers will be unable to obtain financing; halting project progress.
Recommendations for BESS developers
It is likely that best practices for BESS development will continue to experience frequent updates. While developers may be preoccupied with other tasks, such as financial reporting, client interactions, and business development, it is vital they remain vigilant and aware of changes regarding compliance, improving technology, and safety standards.
Insurers will apply the latest safety standards when assessing the risk of BESS projects. In case of non-compliance, developers might face higher premiums or struggle to find cover. The following steps are imperative for developers to ensure their current or future BESS site remains compliant and insurable:
Involve insurance professionals from the very start of a project
Adhere to international safety standards
Integrate compliance into company-wide processes
Stay abreast of BESS technology developments
Find out more by contacting a member of our team, or visit our Renewable Energy page (opens a new window).
