Due to its rapid technological development as well as its strong installed power capacity growth, renewable energy is on every power conference's agenda. The Asia Power Forum, which took place in Singapore at the end of April, was no exception. It dealt with different topics related to renewable energy on a number of the discussion sessions. Taking the lead on advancing sustainable energy solutions, Swiss Re's Patrice Nigon, presented on Offshore Wind farms and the use of the Offshore Code of Practice, as wind farms are beginning to join solar panels as popular renewable energy sources in Asian countries.
As renewable energy relies on the weather factor, the use of it can cause intermittency in power generation. When the wind blows or the sun shines, the generated electrical power is either used or lost. Then again, when there is no wind or the sky is cloudy, power may not be available to meet demand. This volatility not only can cause power quality concerns - for example on the stability, voltage regulation etc, it can also become an issue while trying to integrate the generated power into the grid. One way to resolve this can be using energy storage.
Energy storage solutions can capture excess energy during productive times and release it during leaner times, a crucial ingredient for a complete and rounded process while dealing with renewable energy generation. This is why this topic caught my attention, when AES (Advancion Energy Storage), a USA-based utility company that focuses on energy storage solutions, presented their advanced lithium ion technology for energy storage at the Forum. What is novel about this product is the fact that it could manage capacity release and regulate the grid frequency. In addition, it can allow seamless integration of renewable energy into the grid and meet peak power needs.
Currently, AES has delivered more than 200MW of installed lithium-ion-battery storage systems, spread over various American and European countries. Additional 200+MW are currently under construction or at late development stages.
AES expect a worldwide battery boom by 2024, which will increase its capacity by 15-fold, i.e. to more than 40 GW. This significant battery capacity growth can translate into a considerable investment in energy storage over the next few years. As a result, this could accelerate the transformation of the power grid at all supply-chain levels, i.e. generation, transmission and distribution to achieve more efficient, resilient, secure, cost-effective and sustainable energy networks. This is just one example, but one which can mean a truly transformation of the energy scene.
For the insurance world, these developments will present new challenges, the most defying being fire and explosion risks. Recent computer or cellphone battery-explosion incidents are still fresh in our minds. Experts highlight safety concerns of lithium ion batteries for fire and explosion hazards, and suggest that these batteries require appropriate protection devices. If a cellphone can cause so much damage, imagine what the exposures of a big scale storage battery - consisting of big racks of thousands of batteries put together - can be! Rigorous protection measures as well as risk management are fundamental.
A further interesting question for us (re)insurers will be to define the Lithium Ion battery lifetime: Would it be based on a calendar life (i.e.life span in years)? Or life cycle (i.e. number of charge and discharge cycles)? Or both? There seems to be several ways to address battery life assessment, which apparently depends closely on variability, degradation, conditioning and multi-cell devices and the like. Topping up on this, clients can approach the (re)Insurance industry for possible defect guarantee or performance covers, an area some of our colleagues at Swiss Re are currently looking into.
The (re) insurance industry will definitely face critical asset and solutions challenges when confronted with this technology's rapid development, particularly considering its novelty and the lack of long-term operational experience. A better understanding of the safety and performance of the energy storage technology is key to the success in delivering (re) insurance solutions.
Swiss Re is among those companies who have been promoting green solutions for now more than 20 years. The arrival of this new technology presents us with an opportunity to work on innovative and tailor-made solutions that support green tech investment which can help the world to become more resilient.
Category: Sustainable energy: Solar, Wind