Discover the trend, meet the trendspotter.
Battery energy storage system risks
The trendspotter
"The biggest risk with a battery energy storage system is fire. A major equipment breakdown risk is the battery management system, which keeps individual cells balanced across the system. In some configurations, a failure there can take the entire energy storage system offline."
Brandon SmithHSB Senior Engineer
Staying ahead of what’s evolving
Battery energy storage systems (BESS) are rapidly becoming a critical part of modern power infrastructure. As their role expands from backup power to grid support, the risks tied to their performance, reliability, and safety are evolving just as quickly.
Understanding how those risks are changing is essential as energy storage moves from optional to essential.
50%
Battery energy storage projected year over year growth by spring 2027
The trend: energy storage is moving to the center of the power system
BESS are being deployed at an unprecedented scale to support growing electricity demand and a more dynamic grid. Two forces are accelerating adoption:
- Rising power demand driven by the rapid growth of data centers
- Renewable energy expansion in cases where generation doesn’t always align with consumption
As a result, BESS are now found everywhere, from utility‑scale installations to commercial facilities to residential applications.
Battery storage is not just growing — it’s scaling rapidly
How BESS are being used
At their core, battery energy storage systems help balance when and how electricity is used. They provide backup power for critical operations, helping maintain continuity during outages, while also storing excess energy when supply exceeds demand and discharging it when electricity is scarce or expensive.
One of the most common applications today is energy arbitrage, storing electricity when prices are low and using it when prices are higher. In the U.S., arbitrage represents the largest primary use of battery storage capacity, alongside growing use in grid stability and reliability services.
As these roles expand, BESS are becoming mission‑critical assets, not just supporting infrastructure.
WECC* refers to WECC without CAISO
Where risk concentrates: fire and system failure
Battery energy storage systems introduce a distinct risk profile, with fire as the most significant concern.
Most large‑scale BESS rely on lithium‑ion battery cells because they offer superior energy density, longer lifespans, and fast charging capabilities. However, under certain failure conditions — such as overheating, physical damage, or internal defects — these cells can enter thermal runaway, releasing flammable gases and generating intense heat.
Unlike conventional fires, battery fires can:
- Reignite after appearing to be extinguished
- Spread from cell to cell within densely packed modules
- Require specialized detection, suppression, and response strategies
As systems grow larger and more concentrated, the consequences of a single failure can escalate quickly.
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The role of equipment breakdown
Fire risk is closely tied to equipment performance, particularly the battery management system (BMS).
The BMS monitors voltage, temperature, and current across thousands of individual cells, ensuring they remain balanced and operate within safe limits. When the BMS fails — or provides incomplete or delayed information — unsafe conditions can go undetected.
In some system designs, a BMS failure can force an entire energy storage system offline. In others, it can allow localized problems to escalate into larger events. As BESS scale up, the interaction between monitoring systems, thermal controls, and physical equipment becomes a critical point of risk.
Managing risk as systems scale
Mitigating BESS risk requires more than design alone. Effective strategies include:
- Routine inspection and testing
- Continuous monitoring of system performance
- Data‑driven analysis to identify early signs of failure
Advanced analytics and predictive tools are increasingly used to identify warning signs before a breakdown or thermal event occurs — helping operators intervene earlier and reduce loss severity.
85
GW deployed. Estimated U.S. battery storage capacity by the end of 2027 — double compared to 2025.
How HSB is taking on the trend
HSB has a long history of helping clients understand the risks associated with electronic, electrical, and mechanical equipment.
Our engineers bring deep experience across technologies that support power generation and energy storage — applying an engineering mindset to how equipment behaves, how it fails, and how it can be protected. It’s in their DNA.
We provide engineering, inspection, and equipment breakdown, and property risk solutions that help mitigate risk, reduce downtime, and support long‑term resilience. Beyond risk transfer, we’re committed to sharing our knowledge and helping clients and partners better protect the equipment their operations depend on.
At HSB, we’re constantly tracking emerging trends, studying how risk evolves, and identifying practical ways to stay ahead of it.
