Updated December 4, 2025

Grid-scale BESS warranties continue to be an industry aspiration. But I see little evidence that insurance policy-writers are putting words into action.  Almost every major insurance provider features a “renewables insurance” or “battery insurance” section on their website. But the details are sorely lacking.  The truth is that insurers have moved too slowly. They have not stepped up to fill a substantial industry demand for battery insurance.

Insuring something as mercurial as battery chemistry is a non-trivial task. At the same time, the demand is increasing with more and more large scale grid-storage installations.  The “doers” – the folks making, building, integrating, deploying, and operating battery energy storage systems (BESS) — stepped up. They found workable, pragmatic solutions in a world largely devoid of battery insurance.

Long-term service agreements and their relationship to grid-scale BESS warranties

The solution I’m referring to is Long Term Service Agreements (or “LTSAs”). These have been employed since the mid 1990s in the traditional power generation world. BESS system integrators have adopted LTSA constructs as surrogates for BESS performance insurance. LTSAs provide customers with performance assurances by means of an extended grid-scale BESS warranty (good). They give (BESS) integrators an annuity revenue stream over 10-15-20 years (also good).  Typically, these agreements include options for both traditional availability guarantees and capacity maintenance,. This is also known as “battery augmentation” or an ”energy guarantee.”

The unwitting losers in the mix here are insurance companies and their traditional customers – the engineering, procurement and construction (EPC) contractors. EPCs used to be a necessary partner for BESS system integrators because they had the balance sheet to guarantee large deployments to end-users. They also had working relationships with large insurers or were self-insured. They could wrap or bundle a comprehensive break-fix or make-good regime around a multi-year BESS project. Those regimes were, in-turn, covered by the EPC insurers and, in part, battery OEM warranties.

LTSAs have helped to liberate the battery system integrators from EPCs. I expect that over time we will see less EPCs involved in large-scale BESS deployments.  There are, of course, other forces at play lowering the reliance on EPCs for large-scale BESS deployments. As battery system integrators gain experience and increasingly understand the costs and pitfalls involved, their project risks decrease. At the same time, their balance sheets increase, thereby again reducing the impetus for involving EPCs.

The evolution of the LTSA

The performance grid-scale BESS warranty embedded in LTSAs offers up many advantages to the system integrator. This bviates the need for longer-term extended “break fix” guarantees and aggressive liquidated damages in the procurement contract. It also shifts the guarantee elements to a separate contract that offers more flexible, performance-based extended warranties tied to the LTSA.  By performance-based, I mean LTSAs that are measured against the following:

• Capacity formulas
• Round trip efficiency (RTE) computations
• Degradation computations, and
• System availability, or some combination thereof.

The battery system integrators, however, are not carrying the LTSA-coupled performance warranty risk by themselves. Battery OEMs help offset the integrator’s grid-scale BESS warranty risks with manufacturer warranties, also known as product warranties.  Specifically, OEM battery companies provide a manufacturer’s or product warranty (say 2-3 years) coupled with a performance warranty. This is based on capacity, RTE, degradation and availability or some combination thereof.  It means that the battery system integrators are exposed to the gap between the OEM manufacturers and product guarantees and their guarantee to the end-customer/operator. Managing this gap is essential for battery system integrators’ profitability. The critical component for managing this “warranty gap” is, of course, battery data.

Typical battery lifecycle chain-of-custody today: OEM retains cell-level manufacturing and formation data, while downstream integrators/operators lack direct access — creating a data transparency gap that obscures warranty and insurance risk.

The battery lifecycle chain of custody

Typically, the battery lifecycle chain of custody is broken between the battery OEM and the battery system integrator (see diagram below). That is, the battery OEM tracks quality issues and has manufacturing details and formation charge baselines for every battery they ship. This data is not systematically shared with actors downstream of the battery OEM, including the battery system integrators and operators/end users.

At BESS deployment, the system integrator becomes the primary data custodian — capturing commissioning parameters, BMS/PCS telemetry and balance-of-plant data, which determines battery health, warranty compliance and long-term performance liability.

The battery system integrator is the other major custodian of the battery lifecycle value chain. They collect the BESS configuration data, battery commissioning data, the balance of plant telemetry (inverters, meters, etc.) and, of course, the BMS data. In short, the battery system integrators control the high-resolution BMS telemetry from the day the site is commissioned to the moment it is decommissioned. The battery system integrator also serves as the steward for the PCS, inverter system, and metering data.

From the BESS owner and site operator perspective, this creates an interesting dilemma, particularly in the context of LTSAs. Any contractual dispute tied to an LTSA will – by necessity – fall into the battery system integrator’s purview.  Given that battery system integrators have control of the data value chain, they sit in the catbird seat when it comes to battery performance disputes. From the BESS owner/end-user’s perspective, this has the awkward effect. The LTSA enforcement is wholly up to the fox (the battery system integrator) guarding the “BESS KPI and performance guarantee henhouse.”

The importance of data transparency

But are battery system integrators to blame for this “data transparency imbalance?” I am not so sure.  Per my opening comments, the lack of willingness of insurers to provide BESS specific policies have forced the “doers” to come up with a solution.  And right now, the prevailing solution is LTSAs with extended warranties provided by battery system integrators.

We need to assume that battery performance will diverge. Dispatch regimes, ambient temperatures, and long-term degradation curves for Li-ion battery chemistries are big longitudinal uncertainties to name a few. What happens when BESS performance begins to diverge from the LTSA KPIs in the out years? Will BESS operators tolerate “the data transparency imbalance” inherent in LTSAs? Or that the battery system integrators are keepers of the BMS and other raw battery data?

If insurers were active in providing BESS performance insurance, they could help resolve this data transparency imbalance. For example, by setting requirements for raw data access, fidelity and transparency in their policies. In this case, the insurer would dictate requirements for ongoing, real-time data access and use the claims process for triggering comprehensive data discovery and data audits. Presumably, this would give BESS operators more choice in selecting monitoring systems. This is a decision today largely controlled by the battery system integrator. They are more standard and not proprietary to just one battery system integrator.

The takeaway

At Peaxy, we’ve helped battery system integrators with this data transparency issue.  Battery system integrators use our software to provide their end users/operators instant access to a secure portal. They have instant access to raw and normalized telemetry streams at (in most cases) 1Hz resolution in near real-time.  All the graphing functions, computed KPIs, alerts and alarms that our software provides are also available to the BESS customer/operators. As a result, everyone can access the same data set and run their own analysis whenever they choose. Arming all parties involved in managing a BESS with the same data access and feature sets levels the playing field and ensures total transparency in service agreement scenarios.

Frequently Asked Questions (FAQ)

What makes grid-scale BESS warranties different from consumer battery warranties?

Grid-scale BESS warranties are far more complex because they must account for diverse operating conditions, multi-year performance guarantees, energy throughput limits, cycle life degradation, and revenue-based use cases. Unlike consumer warranties, grid-scale BESS warranties require high-fidelity operational data to validate compliance and assess risk.

Why is battery data essential for managing grid-scale BESS warranties?

Battery data provides the ground truth needed to confirm how the asset was operated, whether warranty terms were met, and whether degradation is within expected models. Without accurate, granular data, owners and insurers cannot resolve warranty claims or quantify the true financial risk of the system.

How does poor data collection impact battery insurance and warranty outcomes?

Incomplete or low-resolution data makes it difficult to establish root causes of degradation or failure. Insurers may raise premiums or restrict coverage, and OEMs may deny warranty claims due to insufficient evidence. High-quality battery data reduces disputes and shortens resolution times.

What types of data are most important for BESS warranty and insurance analysis?

Critical data types include cell- and module-level voltage, temperature, current, SOC estimates, C-rate exposure, throughput, calendar aging indicators, thermal events, and metadata from BMS and PCS systems. Contextual data—like dispatch schedules and ambient conditions—further improves accuracy.

Can advanced battery analytics extend the life of a BESS or reduce warranty risk?

Yes. Predictive analytics and physics-informed models can identify early degradation trends, prevent over-cycling or high-stress operating modes, and optimize dispatch strategies. These insights help maintain compliance with warranty terms and reduce avoidable degradation.