Munich Re is allowing battery manufacturers to insure against the risk of their products not delivering as promised. This will make it easier for manufacturers to increase the deployment of battery capacities and make renewable energy more dependable. The cover is primarily aimed at major projects, like those ensuring grid stability or covering peak demand periods.
According to Peter Röder, Member of the Board of Management at Munich Re, “The ability to insure battery performance is a key piece of the puzzle in decarbonising our energy sector.”
The coverage will allow manufacturers to insure their customer warranties – so if the repair or replacement costs of defective or weak battery modules exceed a predetermined amount, the insurance covers the rest, enabling manufacturers to unburden their balance sheets. It will also become easier for them to obtain project financing, because the maximum costs for warranties are capped by the insurance cover. The coverage can be expanded to protect selected investment projects directly, so that insurance will pay even if the manufacturer issuing the warranty files for insolvency within the warranty period.
The product will likely be introduced onto the mobility market, to insure performance of batteries in electric vehicles, in a second phase.
The first customer for the product is the US battery manufacturer ESS, whose redox flow batteries will be sold with Munich Re’s performance warranty cover. ESS produces stationary battery modules that allow energy from solar parks and network operators to be stored over long periods.