Battery storage has spent years as the renewable energy sector's most feared technology but the underwriters who once treated lithium-ion fires as an unpriceable risk are changing their tune, according to John Rae, renewable energy leader for the Pacific at Willis.
"I've actually seen the battery market improving quite dramatically," Rae told Insurance Business, pointing to rapid gains in how battery systems are designed to contain a fire once it starts.
Public perception hasn't caught up with the underwriting reality, Rae said, describing the gap between how often batteries actually fail and how the failures that do happen get covered. "They don't catch fire that much and when they do, they're well publicized by certain news segments," he said.
The core engineering problem has always been what's known as thermal cascade: One battery unit catching fire and triggering a chain reaction through neighbouring units. Rae said that risk has fallen sharply as manufacturers redesign both the hardware and the spacing around it. Older, indoor installations without adequate separation between units have historically been the worst performers when a fault occurs; newer projects are engineered from the outset to prevent one failure becoming many.
Tesla's latest generation of battery systems is a case in point. "So Tesla's new Tesla 3 megapacks are designed so when they do go on fire that they collapse inwards," Rae said. This limits how far a fault can spread and can be paired with early-warning detection systems designed to trigger suppression before a fire reaches cascade stage. The cumulative effect, in Rae's view, is a genuine shift in insurer sentiment: "They're [battery systems] getting much, much better and insurers are seeing that and are getting much more comfortable with batteries," he said.
Both Australia and New Zealand now have live, large-scale examples of this generation of technology in commercial operation. In New South Wales, RWE's Limondale battery energy storage system -144 Tesla Megapacks delivering 400 MWh alongside the company's existing Limondale solar farm - received full grid sign-off from the Australian Energy Market Operator and Transgrid in May 2026, becoming Australia's first eight-hour-duration battery. Across the Tasman, Contact Energy's Glenbrook Ohurua Battery 1, a 100 MW/200 MWh facility in South Auckland built on 56 Tesla Megapack 2XL units, opened within weeks of Limondale reaching full operation. A second Glenbrook unit is expected online in 2028, lifting that site's combined capacity to 300 MW. Together, the two projects give brokers on both sides of the Tasman a concrete, currently operating test case for the containment design Rae is describing, rather than a theoretical improvement.
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For brokers, that shift can matter commercially as much as technically: A documented improvement in containment design is exactly the kind of mitigation story that gives an underwriter grounds to hold terms rather than restrict them, echoing the same broking dynamic already reshaping how inverter risk is priced.
The urgency behind these design improvements comes from how quickly batteries are being bolted onto new projects on both sides of the Tasman. Electricity pricing has grown more volatile as rooftop and utility-scale solar push daytime prices into negative territory in some states, making batteries commercially essential rather than optional. Rae said the shift is now near-universal across his own client base: "Every single one of my projects that I'm working on right now has some form of battery associated with it," he said.
That build-out is following solar and wind into the same renewable energy zones already under scrutiny for hail and bushfire accumulation risk - meaning battery risk assessment is no longer a niche conversation confined to standalone storage projects but a factor in nearly every renewable placement a broker brings to market, whether in New South Wales or South Auckland.
That convergence puts more pressure on brokers to stay current on containment design, spacing standards and early-detection technology across every renewable asset class they place, not just dedicated battery projects. As Rae's experience shows - and as Limondale and Glenbrook now demonstrate in operation - insurers are responding to demonstrated engineering progress but only where brokers can document it project by project.
