The UK has made impressive progress towards net zero, with emissions levels now 50% below 1990 levels, according to the latest Climate Change Committee report. This has been achieved through the continued growth of renewable power and transport electrification. Future progress will be harder, however, requiring a more flexible electricity system. Battery technology will be critical, powering electric vehicles (EVs) on British roads to grid-scale storage that can absorb power and release it when needed.

That makes confidence in battery technology key. Yet proposals for BESS continue to attract concern about safety and their effect on nearby communities. Recent planning disputes in County Durham and Perth and Kinross, for example, show how support for clean-energy infrastructure can weaken when projects are proposed locally.

Insurers cannot resolve those objections alone, but by engaging with evolving lithium-ion risks, they can help projects secure finance and build operating experience, while their scrutiny can strengthen safeguards. The question is whether the industry is willing to participate early enough in the innovation cycle to make that contribution.

The battery insurance gap
Underinsurance is already a widespread concern. The Hiscox global protection gap report 2025 found that 74% of UK small and medium-sized enterprises reported some degree of underinsurance. Emerging energy technologies present an additional challenge because insurers have less historical loss data on which to base their decisions. The technologies, operating practices and safety standards are also developing very quickly.

This is particularly relevant to BESS and other applications of lithium-ion batteries. When batteries are damaged, defective or poorly managed, thermal runaway can trigger intense fires that are difficult to extinguish. QBE research based on fire-brigade data recorded 1,760 lithium-ion battery fires in the UK during 2025. That’s an average of one every five hours.

Many of those incidents involved consumer products such as e-bikes, e-scooters and vapes, rather than grid-scale storage. The figures should not therefore be treated as evidence that BESS facilities present the same level of risk. They do, however, help explain why public concern about battery safety is growing.

Recycling facilities are also essential to a sustainable battery supply chain, but their high-energy processes and exposure to damaged or unidentified cells create a different set of hazards.

This can produce a damaging cycle. Limited or expensive insurance makes battery projects harder to finance. That constrains investment in improved technology and risk controls, while highly visible incidents reinforce public concern and make future developments more difficult.

Running towards risk
The UK insurance industry grew out of risk, with merchants and underwriters sharing the uncertainties of maritime trade. Its purpose was never to wait for risk to disappear, but to understand it well enough for commerce to proceed.

The same principle should apply to BESS. Engaging with battery risk does not mean accepting every project. It means building the technical knowledge to distinguish robust schemes from weak ones. Underwriters must work with the people designing and operating BESS sites to test whether each scheme has credible controls from installation through to emergency response.

That expertise should not remain hidden inside insurance negotiations. If underwriters explain what they require and why, planning authorities and fire services gain a clearer picture of how risks will be controlled. Communities, in turn, have something more concrete than reassurance from a developer.

Policy conditions can raise standards before a site begins operating. Once it does, claims experience can expose weaknesses that should be designed out of the next project. Underwriting should evolve as that evidence accumulates.

Underwriters must work with the people designing and operating BESS sites to test whether each scheme has credible controls from installation through to emergency response.

Underwriting a sustainable future
For battery storage businesses, this approach can mean the difference between a project that stalls and one that secures finance and begins building operating experience. It also makes the insurance sector an active participant in innovation rather than a reluctant observer.

The risks associated with earlier generations of lithium-ion batteries are not necessarily representative of the systems being installed today or those that will follow. Insurers should avoid relying on outdated assumptions, just as they should avoid overlooking genuine hazards.

Avoiding unfamiliar risks may limit an insurer’s immediate exposure, but it can slow the learning needed to make battery technology safer. As climate change increases physical and financial pressure across the insurance market, disengagement may leave insurers and society facing the greater long-term consequences of a delayed energy transition.

Closing the battery insurance gap will depend on insurers working alongside the companies developing projects and the public bodies responsible for their safety. The industry should rediscover the purpose on which it was founded: understanding unfamiliar risks well enough to make progress possible.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the Energy Institute.

• Further reading: ‘Thermal runaway: how to reduce the fire and explosion risk in BESS?’ As renewable energy infrastructure gathers pace worldwide, new solutions are needed to handle the fire and explosion risks associated with lithium-ion battery energy storage systems in a worst-case scenario. Industrial safety solutions provider Fike and Matt Deadman, Director of Kent Fire and Rescue Service, looks at this serious issue.
• ‘Beyond the meter: turning electricity purchasing into a competitive advantage’. As electricity grids continue their trajectory towards greater decentralisation, find out why energy managers need to evolve from being passive, price-accepting consumers to become active market participants.