BESS Is Scaling Fast, But Is India's Insurance Market Ready for Battery Risk?

The storage numbers are hard to ignore. India has gone from barely a gigawatt-hour of installed BESS capacity a few years back to over 8 GWh today, with roughly 90 GWh in the pipeline. Insurance, by comparison, is still figuring itself out.

September 11, 2026. By News Bureau

Tags:

articles

Jigar Parikh

EDME Insurance Brokers Ltd.

Every few weeks I sit across from a developer who has just closed financing on a battery storage project and treats insurance as an afterthought. "It is basically solar, just add a fire policy and we are good." I get the instinct. But it is wrong, and that gap is where our market still has real caught up to do.

The storage numbers are hard to ignore. India has gone from barely a gigawatt-hour of installed BESS capacity a few years back to over 8 GWh today, with roughly 90 GWh in the pipeline. Insurance, by comparison, is still figuring itself out.

Why This Is Not Solar with A Battery Bolted On

Solar assets are more standard to underwrite, and I mean that as a compliment. Panels degrade predictably, decades of loss data exist. A battery installation stacks electrochemical, electrical, and thermal risk together, and the headline exposure, thermal runaway, does not behave like a normal fire. Once a cell runs away, it can jump module to module, and with weak spacing or suppression, container to container, sometimes within minutes. Chemistry matters too; LFP, favoured in most Indian grid-scale projects, is meaningfully more stable than the NMC chemistries used in denser applications, and underwriters are now pricing that gap explicitly.

There is a quieter risk that gets less attention: plain degradation. Every cycle costs a battery some capacity, and the rate depends on how well cooling and battery management systems actually hold up, not how they were specified on paper. India's climate does not help; a cooling system built against a cooler benchmark works harder, and fails more, in Rajasthan or Telangana in May.

Where The Standard Policy Falls Short

Most BESS projects here are still insured on fire and engineering wordings borrowed from solar or thermal plants. Three gaps stand out.
Property damage: standard fire wordings were not written for propagation dynamics or the suppression a battery fire needs, so sums insured and exclusions often do not match how the asset fails.

Business interruption: BESS revenue increasingly comes from capacity payments and merchant dispatch, not a flat output tariff. A policy calibrated to physical reinstatement time can miss the real loss, a missed dispatch obligation, even when damage was contained.

And the one that causes the most grief at claim stage, the boundary between OEM warranty and insurance. Warranties cover manufacturing defects, insurance responds to external causes and operating faults. When a cell runs away, the cause is often genuinely unclear, and I have watched operators get stuck in the middle while the OEM and insurer each point at the other. Without an agreed process for independent investigation, worked out at placement rather than after the fire, that ambiguity becomes the developer's problem.

What I Tell Clients to Do Differently

BESS can absolutely be insured well, but the placement needs more thought than a copy pastes from the solar programme. The engineering survey should not be a formality; it should look hard at container spacing, suppression design, cooling redundancy, and BMS discipline, since most claim severity traces back to these secondary systems, not the cells themselves. Business interruption cover needs to match how the asset earns money, capacity payments, and merchant dispatch, not just physical rebuild time. And the warranty-insurance boundary should get settled before you sign, not after something burns.

Documentation matters more than developers expect maintenance logs, BMS firmware history, suppression test records. Tedious, but it is the difference between a clean settlement and a yearlong dispute. And build in time. Larger placements now get layered across several insurers, GIC Re and offshore reinsurance, and a submission that lands six months out gets meaningfully better terms than one that shows up three weeks before renewal.

Where This Is Headed

To be fair to my own industry, we are moving. Specialised BESS wordings, performance warranty products for OEMs, closer involvement from reinsurers through GIFT City, none of this existed two years ago. But that maturity is arriving alongside the capacity build-out, not ahead of it, which makes every developer financing a project today an early adopter of both the technology and the insurance meant to sit under it. That gap is exactly where a project's financial resilience gets decided, usually years before anyone finds out whether a single cell was going to hold up. Getting the structure right at placement is a lot cheaper than finding out its limits at claim.

- Jigar Parikh, Director - Corporate Solutions, EDME Insurance Brokers Ltd.