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The surge of BESS projects in Europe and the California battery fire

Discover the growth of battery energy storage systems in Europe, the impact of recent fire safety concerns, and the challenges facing BESS developers today.

01/04/2025 · 4 minute read

The growth of battery energy storage systems (BESS) in Europe and the implications of a recent fire at a battery plant in California were among the subjects discussed at the Energy Storage Summit 2025 held in London.

Key trends identified at the conference included:

There has been a notable increase in battery projects in Europe, driven by the momentum generated by BESS in the UK, Australia, and the US over the past decade.

Developers in Europe face hurdles in securing adequate risk transfer, as local insurers often lack experience with battery technology, resulting in a cautious approach to underwriting. This presents an opportunity for knowledge sharing and collaboration between local stakeholders and experienced industry entities.

The battery fire at the Moss Landing Power Plant in Monterey County, California, in January has raised concerns about fire safety standards at battery plants. In response, fire safety guidelines are being revised, with updates expected to be implemented across various BESS locations.

Although the Moss Landing Power Plant fire may represent the largest battery loss in history, its specific circumstances are unlikely to cause a significant shift in the BESS insurance market.

The growth of BESS in Europe amid risk

Over the past decade, the BESS sector has seen significant growth in the UK, Australia, and the US, positioning these countries as early industry leaders. However, Europe has only recently begun to see a notable increase in battery projects.

Following two years of approximately 100% growth, Europe’s BESS market is expected to grow 30% to 40% from now until 2028, with the UK, Germany, Italy, Austria, and the Czech Republic identified as key markets.

This uptick can be attributed to several factors, including government initiatives aimed at decarbonisation and reducing dependence on imported energy. Other factors contributing to this momentum include regulatory changes, such as the EU Batteries Regulation, which aims to create harmonised legislation for battery sustainability and safety; grants for battery projects (e.g., Portugal awarded grant support to BESS projects through the EU Recovery and Resilience Facility); and the establishment of pathways for projects to support national grids.

Many European countries are prioritising BESS, with Italy, Germany, and the UK recently ranked as the top three most attractive countries for BESS investors in Europe.

However, alongside this growth, BESS developers face challenges in mitigating risk. Fire remains a primary concern, while flooding poses additional risks in Europe, requiring careful attention to site selection, elevation, and drainage. The rapid expansion of battery projects has created a demand for skilled professionals that has not always been met, sometimes resulting in rushed installations by less experienced companies. Additionally, the upsurge in projects has heightened the demand for equipment, leading to delivery delays caused by supply chain bottlenecks.

Local insurers, aware of high-profile battery fires and lacking experience with battery technology, can adopt a cautious stance towards covering the associated risks. This situation creates opportunities for knowledge sharing and collaboration between local organisations and experienced industry entities.

Will the California battery fire hamper BESS growth?

The fire at the Moss Landing Power Plant has raised significant concerns about the safety of lithium-ion battery storage. The blaze, which ignited on 16 January 2025, burned for five days and destroyed 300 megawatts of energy storage — a significant amount of California’s clean energy storage capacity.  

The fire has already resulted in delays to BESS projects, as the heightened perception of risk has complicated efforts for developers to expedite their battery projects through the planning stages.

The fire has also generated discussions about fire safety standards, with California already updating its fire safety guidelines. BESS stakeholders should remain vigilant for further changes in fire safety regulations, as this incident is likely to lead to more stringent review processes for battery projects, thereby complicating the regulatory landscape for developers.

Improving education on the causes and frequency of battery fires, as well as the safety measures implemented to prevent such incidents, is crucial for mitigating these challenges.

It is important to note that the battery project involved in the California fire was an indoor facility, which inherently carries a higher risk of fire spread due to the proximity of battery packs and the confined space. In contrast, outdoor battery projects generally present a lower risk of large-scale fires, as an open environment allows for easier access for fire services to manage and contain any incidents.

The California fire is unprecedented in scale and it is essential to await the root cause analysis to glean valuable insights for future projects. This scrutiny will provide critical learnings for developers and insurers, ensuring that similar loss mechanisms are not replicated in upcoming projects. While the California battery fire has raised important safety concerns and may lead to regulatory changes, it is not expected to cause a significant market shift or increase insurance costs because of its unique circumstances.

How Marsh can help

Marsh can support BESS projects in various ways, including conducting comprehensive risk assessments to identify operational, environmental, and regulatory hazards, which aids in developing effective risk management strategies. We offer tailored insurance solutions to protect against risks such as fire, theft, liability, and business interruption, ensuring adequate coverage for the unique challenges of battery storage systems.

With extensive industry knowledge, Marsh offers market insights to help clients make informed decisions regarding project development and investment. By leveraging all these services, Marsh can assist with the planning, execution, and operation of BESS projects while mitigating risks and enhancing overall project viability.

To find out more about mitigating the risks associated with a BESS project, please contact your Marsh advisor.

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Alastair Nicklin

Alastair Nicklin

Vice President, Power and Renewable Energy

  • United Kingdom

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