Energy Storage Boom Outpaces Insurers as Sodium-Ion Batteries Rise

The energy storage sector is evolving at an unprecedented pace, with battery technology advancing far quicker than insurers can assess risks. In just five years, the capacity of large-scale battery enclosures has surged by 500%, from 3 MWh in 2019 to over 14 MWh today. Meanwhile, new chemistries like sodium-ion are gaining traction, offering alternatives to traditional lithium-ion systems amid ongoing supply chain concerns.

Between 2024 and 2026, sodium-ion batteries have moved from pilot projects to commercial use in major energy storage systems. US and European energy giants, including NextEra Energy and RWE, have deployed them in large-scale installations—such as a 50 MWh facility in California (2025) and an 80 MWh project in Germany (2026). These developments come as developers seek to reduce reliance on lithium, which remains vulnerable to geopolitical tensions and price swings.

The rapid pace of innovation has left insurers struggling to keep up. Underwriters like Michael Carrington of Tokio Marine GX highlight that the renewable energy industry is outpacing the ability to build reliable risk models. Large-scale fire testing is now common, but insurers are shifting focus toward installation contractors and wider system components. High-voltage transformers, for instance, are seen as critical single points of failure. Installation challenges also pose risks. Minor errors during setup can damage battery containers, compromising their protection against temperature and humidity. Some losses have even stemmed from accidental fire suppression aerosol releases during commissioning. With Engineering, Procurement, and Construction (EPC) firms rarely installing identical systems twice, unforced errors at integration stages remain a persistent issue. The expansion of grid-forming and black-start capabilities in energy storage systems further complicates risk assessment. These advancements, while improving grid resilience, limit the historical data insurers rely on for underwriting decisions.

Sodium-ion technology is now being adopted in major projects, providing a complementary option to lithium-ion rather than a full replacement. However, the industry's rapid growth continues to test insurers, who must adapt to new risks in high-capacity systems and evolving installation practices. As geopolitical and supply chain pressures persist, alternative battery chemistries are likely to play an increasingly important role in future energy storage deployments.