Grid scale co-located solar/BESS comes of age

Solar power has transformed the power generation landscape, becoming one of the world's most affordable energy sources. The levelised cost of electricity for solar is now 1.5 to 2.5 times lower than gas, and 2 to 3 times cheaper than coal. However, the intermittent nature of solar energy has been an obstacle to more widespread adoption. Huge advances in battery storage technology and scale are helping to solve this intermittency problem.

Solar PV combined with large scale BESS enables a co-located solar/BESS project to provide reliable baseload power, significantly improving overall grid supply and demand management. The space requirements of these projects remain a constraint, but the addition of HVDC cables and other grid connections to enable remote delivery of generated power has increased their flexibility. Such co-located solar/BESS grid-scale systems are now coming of age, with several projects under development globally.

Facilitating the world's largest co-located solar/BESS project

Our Energy teams in Singapore and London recently completed the insurance placement for the largest project of its type globally - a USD2.3bn investment in the Philippines. This ambitious endeavour promises to deliver clean, reliable energy to an estimated 2.4 million households and deliver a guaranteed 850MW of electrical power to the grid. 
It will play a crucial role in the Philippines’ energy transition, helping to avoid 3.6 million metric tons of carbon emissions each year. The project aligns with the Philippines' ambitious target of sourcing 50% of its energy from renewables by 2040 and positions the country as a leader in the renewable energy sector.

Our Renewable Energy & Environmental Technology (REET) team, working with the power and construction expertise in our Singapore office, guided our client through a complex placement involving significant capacity and Nat Cat concerns. The team needed to create a market for this risk, as the placement exceeded the currently available limits of commercial capacity for Philippine CAT exposure in the construction reinsurance market. 
Through the collaborative efforts of our offices in Singapore and London, we successfully attracted over 30 insurers to the programme and placed the largest CAT aggregate for a renewables project in the Philippines.

Learnings for risk managers

• Mega projects in PV/BESS technology create unique contractual and risk challenges. Sufficient time must be allocated to enable engagement in risk analysis and programme design.
• Engagement of the lender/lender's adviser is key, with detailed business cases built in support of desired insurance structures, supported by EML scenarios and CAT modelling.
• The market is sensitive to certain design specifications including export cable robustness, sub-station positioning and redundancy, solar panel selection and mounting design and BESS specification and spacing. The commercial project teams need to collaborate closely with the risk manager to turn around information requests from the market promptly for a successful placement process.