Global reinsurance giant Munich Re is the first re/insurer to provide a solution that protects battery performance, enabling manufacturers in the battery market to offer long-term performance guarantees.
Munich Re’s latest development in the energy sector sees it become the first in the world to offer long-term insurance for battery performance, with a solution that covers manufacturer performance warranties for ten years.
The new product enables battery manufacturers to unburden their balance sheets by providing insurance when repair or replacement costs that come under customer warranties exceed a predetermined amount.
Member of the Board of Management at Munich Re, Peter Röder said: “The ability to insure battery performance is a key piece of the puzzle in decarbonising our energy sector. For the first time, battery manufacturers can insure against the risk of their products not delivering as promised. With this new coverage, Munich Re has again demonstrated its pioneering role in the insurance of climate-friendly technology.”
It is expected that it will also be simpler to secure project finance, driven by the fact the maximum cost for any warranties are capped by the insurance protection. According to an announcement on the new cover, this is an important and distinguishable feature for investors.
Ultimately, that the warranties are backed by insurance protection makes it “significantly easier for manufacturers to ramp up deployment of battery capacities, thus making renewing energy more dependable and widely available.”
Primarily, the new protection on offer from Munich Re is for major projects, and, the cover can be expanded to protect selected investment projects directly.
A second phase roll out of the product is planned, when it will be introduced to the mobility market, to insure such things as the performance of batteries in electric vehicles.
U.S. domiciled battery manufacturer ESS Inc. is the first customer to use the new product. ESS Inc.’s redox flow batteries will now be sold with the re/insurer’s performance warranty cover.