Increasing Demand for Quality Control and Risk Management in Battery Energy Storage Systems

According to the 2025 Solar Risk Assessment by kWh Analytics, a specialized insurance company focused on renewable energy, there is a growing concern regarding the safety of battery energy storage systems (BESS), particularly following recent fire incidents. Interestingly, this rise in concern comes despite a staggering 98% decrease in the overall incident rate from 2018 to 2024.

The assessment highlights that hail damage accounts for 73% of financial losses in U.S. solar photovoltaic (PV) projects. For a more detailed examination of solar-related findings, refer to the coverage provided by our colleagues at PV Tech.

kWh Analytics’ latest findings are consistent with those from their previous assessment. In 2024, the company identified thermal runaway as the primary risk that energy storage system (ESS) developers need to consider. These battery risk insights are derived from reports from four key sources: Clean Energy Associates (CEA), The Electric Power Research Institute (EPRI), ACCURE Battery Intelligence, and TWAICE.

Last month, CEA released its BESS Quality Risks report, revealing that 72% of manufacturing defects occur at the system level. Such defects can significantly compromise safety and potentially lead to fires. Notably, among these system-level defects, 28% pertained to fire detection and suppression. Fortunately, the report reassures that no systems were shipped with unresolved thermal management defects.

EPRI’s aggregate failure root cause analysis, published last year, found that 72% of BESS failures occurred within the first two years following installation. Out of the 81 failure incidents recorded, only 26 had sufficient information to ascertain root causes, while 64 included documentation of system age at the time of failure. Some incidents may not have been captured in the database, as it relies on public reporting.

Errors in state of charge (SoC) estimation can also pose financial and operational risks for BESS developers. Lithium iron phosphate (LFP) technology has emerged as a standard in the BESS sector, representing over 80% of new grid-scale storage developments. However, estimating SoC accurately for LFP cells remains challenging. Accure Battery Intelligence and Modo Energy explain that LFPs exhibit a flat open circuit voltage (OCV) curve, complicating the conversion of voltage readings into precise SoC values. Furthermore, LFP OCV curves exhibit hysteresis effects, meaning that voltage is influenced not only by SoC but also by the direction and history of current flow. Powin and Tierra Climate have recently conducted research on SoC, which Powin’s Chief Transformation Officer, Michael Bennett, discussed with Energy-Storage.news. Bennett noted that historical reports indicate SoC errors can range anywhere between 10% and 30%.

kWh Analytics emphasizes that adopting more advanced SoC solutions can help improve the performance of LFP systems. The company also referenced findings from TWAICE’s BESS Pros Survey, which surveyed 83 professionals, including engineers, technicians, and asset managers. The survey revealed that 73% of operations and maintenance (O&M) staff experience technical issues at least once a month, compared to just 53% of asset managers. Additionally, 40% of O&M personnel reported encountering issues weekly, which is double the rate reported by asset managers.

This discrepancy underscores a disconnect between technical performance and financial oversight. If operational issues are left unaddressed, it can lead to increased downtime and financial losses. To mitigate this, establishing a robust data strategy and BESS analytics can ensure that technical issues are accessible to multiple teams and can be resolved at various levels.

Overall, kWh Analytics underscores the urgent need for enhanced quality control and risk management strategies as BESS deployment accelerates. Geoffrey Lehv, Senior Vice President at kWh Analytics, recently expressed in a guest blog for Energy Storage News that despite alarming headlines from incidents like Moss Landing, the outlook for the BESS insurance market remains stable. Advances in monitoring technologies, improved design standards, and evolving risk assessment methods are contributing to a more resilient power generation industry.