Australia’s rapid rollout of battery storage is pushing insurers to rethink how they assess risk, with Gallagher saying projects are being deployed faster than traditional insurance frameworks were designed for.
Battery energy storage systems, or BESS, have expanded quickly in Australia since first appearing in 2017, with growth picking up further from mid-2024 as more large-scale batteries were connected to the grid. Gallagher said these systems are now playing a bigger role in helping meet peak demand, steadying power supply, and supporting more renewable energy on the grid.
That growth is also creating new questions for insurers.
In Gallagher’s view, one of the biggest issues remains fire risk, especially thermal runaway. The broker said concern around battery fires is still influencing insurer appetite, even as battery design and risk engineering have improved.
At the same time, Gallagher said insurers are taking a more detailed view of battery projects than before. It said the growing use of lithium iron phosphate cells, which it described as more stable and less prone to thermal runaway than older battery components, has helped improve confidence. The shift towards outdoor facilities and wider spacing between battery containers has also changed risk assessments by helping slow the spread of fire and making access easier for emergency crews.
That does not mean insurers are treating all projects the same. Gallagher said underwriters are now looking closely at site location, facility design, battery chemistry, and the experience of contractors and other project partners. Indoor installations still attract more caution, but the broker said there is broader willingness to insure projects that are supported by strong risk management.
According to Gallagher, coverage decisions are now being shaped by practical issues beyond the battery units themselves, with insurers looking at factors such as system design, location, and contractor experience when deciding coverage and pricing. Transport, site safety, and public liability also factor into risk assessments.
It also flagged lifecycle and operational risks. With BESS projects lasting around 10 to 15 years, decommissioning plans are becoming part of the conversation. At the same time, tools like AI monitoring are helping insurers track system performance in real time, detect issues earlier, and assess risk more accurately, supporting a shift towards more project-specific underwriting.
