The immediate focus is often on damaged equipment, emergency response and business interruption. But another set of questions quickly follows.
What happens if hazardous substances are released?
What if nearby residents are affected? What if environmental damage triggers regulatory intervention and years of litigation?
- Within hours, questions begin to emerge from local communities.
- Within days, local authorities, environmental agencies and regulators become involved.
- Within weeks, the first claims may start to appear.
The industry received a stark reminder of this reality during the January 2025 fire at the 300-megawatt Moss Landing battery energy storage facility in California. The incident led to the precautionary evacuation of approximately 1,200 nearby residents, air monitoring by public agencies and federal oversight of the removal of damaged batteries.
“Battery energy storage systems are playing an increasingly important role in the energy transition. However, businesses should be aware that the potential consequences of an incident can extend far beyond physical damage. Understanding environmental and liability exposures is becoming just as important as protecting the asset itself.”
Monika Sciuba, Liability & Environmental Director, Polish Branch
The event showed how a BESS incident can move beyond damaged equipment and develop into a complex, long-running liability scenario.
In our discussions with clients, we increasingly encounter the same challenge: BESS is viewed primarily as a property risk, even though significant liability and environmental consequences may emerge long after a fire has been extinguished.
For that reason, we consider BESS one of the most underestimated risk exposures associated with the energy transition.
It is a hybrid risk that combines energy infrastructure, third-party liability and environmental exposure.
Why Thermal Runaway Matters
At the core of many concerns lies the risk of thermal runaway, an uncontrolled chain reaction within battery cells that can lead to fires, toxic gas releases, secondary explosions and environmental contamination.
The good news is that these events remain relatively rare. The challenge is that when they occur, their impact can unfold over months or even years.
A single incident can generate third-party claims, environmental remediation costs, regulatory actions and disputes between operators, manufacturers and contractors.
What begins as a technical failure can quickly evolve into a complex event involving multiple stakeholders and long-term financial, legal and reputational consequences.
As a result, when assessing BESS projects, it is important to look beyond the value and location of the investment. Equally important are the battery technology, safety systems, emergency response procedures and the potential impact outside the facility itself.
Looking Beyond Property Damage
From a risk management perspective, environmental contamination often becomes one of the key considerations. Many insurance programmes were not originally designed with large-scale battery incidents in mind. Coverage limitations, remediation costs and liability exposures can become critical once a loss extends beyond property damage.
For insurers, brokers and businesses alike, this requires a more detailed approach to risk assessment, including scenario planning, emergency preparedness and a thorough understanding of potential environmental exposures.
As the energy transition accelerates, preventing failures remains essential. But the key question is:
Are we prepared for everything that happens after the fire is over?