Ions in the fire

Lithium batteries are powering a host of new technologies, transport modes and the push towards net zero, but they come with a potentially explosive downside

By Andy Swales

Earlier this year, Fire and Rescue New South Wales marked a grim milestone – the state’s first recorded deaths in a blaze caused by a malfunctioning lithium-ion battery.

Two people died in a townhouse in Teralba at Lake Macquarie on February 29, while two others escaped from the flames.

“This appears to be what we have been fearing for a while now: a person or persons dying due to a lithium-ion battery-related fire in this state,” fire service Commissioner Jeremy Fewtrell said. “We continue to warn the community about the potential for these batteries to explode in flames.”

It was a brutal indication of the dangers posed by the kind of rechargeable batteries that power everything from the phone in your pocket to electric cars and our increasingly green power grid.

In January, four tourists at an apartment in North Bondi escaped a blaze started by an e-bike battery that had been left to charge overnight. They were woken by the sound of small explosions and fled as the fire took hold. And last October 4, a lithium-ion battery, again in an e-bike, exploded in a room at the Mad Monkey hostel in Potts Point, NSW. Philip – one of two French backpackers who narrowly avoided serious injury – told the ABC he was “lucky to be here and intact” after leaping from the room as a fireball erupted behind him.

Lithium-ion batteries can be found in e-scooters, forklifts, power tools, laptops and tablets, camping and gardening equipment, and a host of other home, office and industrial items. In fact, the Australian Competition and Consumer Commission (ACCC) says that by 2026 households will have on average 33 devices powered by such batteries.

They are playing a major role in the shift away from fossil fuels, particularly through batteries linked to household solar panels and the “big battery” sites that store renewable energy to feed the grid.

But the growing fire risk has government, fire services and the insurance industry paying close attention.

Strata underwriting agency CHU’s Head of Underwriting Steve Tchepak tells Insurance News lithium-ion battery fires are “certainly on our claims team’s radar. They are low in numbers at present but increasing in frequency … when they do occur, they are intense.”

Commercial property insurer FM Global’s Operations Chief Engineer Mike Hunneyball says the risk has been “topical for a number of years now”.

“Our first research paper we did [on this subject] was 2013. That was around the storage of lithium-ion batteries in warehouse environments, and the fire risks that creates… We can see the increase in usage of these batteries across all industries that we’re dealing with.”

The batteries’ strongest attribute is also what makes them so potentially dangerous. Lithium ions allow for the storage of large amounts of energy in a relatively small area, but the liquid electrolyte in which they are held is highly volatile and flammable, and in producing power the batteries also generate heat.

Dr Matthew Priestley from the Energy Systems Research Group at the University of NSW School of Electrical Engineering and Telecommunications says an overheating lithium-ion battery can succumb to a phenomenon known as thermal runaway.

“In this process, the excessive heat promotes the chemical reaction that makes the battery work, thus creating even more heat and ever more chemical reactions in a disastrous spiral,” he says.

Batteries that are poorly stored (exposed to extreme heat, for example) or ones that overcharge due to misuse or faults can explode into self-sustaining fires that burn up to 400 degrees within seconds – and beyond that thereafter – and are particularly hard to extinguish. The batteries can also release toxic fumes.

“These fires are extremely intense and volatile,” fire chief Mr Fewtrell says. “Even our firefighters find putting them out challenging because they burn so hot.”

In an industrial setting, in which hundreds of batteries may be stored together, the potential for disaster is clear.

Mr Hunneyball tells Insurance News that FM Global keeps brokers and its large commercial property insureds up to speed on risk management through its property loss prevention data sheets, drawing on studies at its research labs.

“That’s where we put all our guidance out there … based on losses that have happened, or research that we’ve done, where we’re learning about these risks.

“Wherever we’re seeing an industry or an area where lithium-ion batteries are being used, we’re adding that guidance in.” The advice covers the storage of consumer products and warehousing.

He says FM Global creates highly tailored risk management programs with a focus on issues such as spacing between stored items to prevent fire spread; suppression systems such as sprinklers; building materials and ventilation; the use of battery management systems that monitor for faults; and emergency response plans.

Shipping is another area of concern. In 2022, after fire sank the car transporter Felicity Ace in the North Atlantic, Allianz Global Corporate & Specialty warned of the risk inherent in moving electric vehicles.

“Safe carriage has become an emerging risk concern for the shipping community, raising questions about the adequacy of fire detection and firefighting capabilities on board vessels, cargo loading procedures and even whether changes in vessel design may be necessary, given specialist equipment is required to extinguish any blazes and salvage operations at sea can be challenging,” Global Head of Marine Risk Consulting Captain Rahul Khanna said.

“The Government needs to step in to regulate this area and develop a safety standard to which e-mobility devices should be constructed.”

On the big battery front, Tokio Marine subsidiary GCube, an underwriter of renewable energy projects, says insurers “remain optimistic” about covering power-grid energy storage systems “despite a track record of concerning failure events”.

It says failures in such systems have increased tenfold since 2016, although this largely aligns with industry growth. Among the issues it cites is a fire at Tesla’s big battery near Geelong in Victoria in 2021.

“There is concern that these failure trends may persist as the market deploys larger 100 megawatt-plus utility-scale assets, leading to increased financial losses for owners, developers and insurers. This concern arises from a recurring pattern in rapidly expanding market segments, where new technologies often face challenges related to quality control – a dynamic recently observed in the offshore wind market.”

GCube says underwriters want “confidence around management of thermal runaway risks, public safety liabilities, and transit and cargo challenges”.

Meanwhile, at the small business and consumer level, authorities are increasingly concerned about the risk, and awareness of it.

Last spring, the ACCC published a report highlighting the dangers of the batteries and warning Australians to take more care using and disposing of them. “We are concerned by increasing reports of lithium-ion battery fires resulting in property damage and serious injuries, including burns, chemical exposure and smoke inhalation,” Deputy Chair Catriona Lowe said.

Dr Priestley tells Insurance News e-mobility devices are a problem area.

“Electric vehicles and residential energy storage devices seem to be quite safe, as they are typically well constructed and have optimal battery management systems,” he says.

“However, e-mobility devices – like e-bikes, e-scooters – often have poorly constructed batteries, chargers or battery management systems.

Experts say e-mobility devices “often have poorly constructed batteries, chargers or battery management systems” Credit: Fire and Rescue New South Wales

“The Government needs to step in to regulate this area and develop a safety standard to which e-mobility devices should be constructed, but there has been slow progress on this. This is part of the reason why there have been so many e-mobility fires in Australia to date.”

Strata specialist CHU recently added to the awareness push, publishing a fact sheet for brokers, property managers and residents.

Mr Tchepak says education is critical “whether it’s raising awareness for customers in terms of the considerations around lithium batteries or more broadly through all sectors involved in lithium batteries and electronic charging.

Clean energy usage is moving so rapidly, a positive action, but … [it] may take some time for all relevant industries – government, insurance, construction and building – to keep up and develop frameworks around this.

“We were made aware of an example from a leading industry expert that a building had retrospectively installed electric vehicle charging stations in its basement car park. Not only were all three charging units installed side by side, but they were also installed directly below the main gas utility line that serviced the entire building – all these factors would increase the chance of a serious event in the [case] of a malfunction.

“So, while it’s near impossible to directly control the behavioural elements of homeowners residing in apartment complexes, examples like this highlight the need for increased vigilance and diligence for all of those involved in the supply and install chain.”

Lithium-ion battery fires may still be relatively rare, but the data does point to an increase in prevalence.

In a submission last November to a NSW inquiry into electric and hybrid vehicle batteries, Allianz reported a 440% increase in claims for lithium-ion battery fires since 2020.

It said the cost of such claims had surged 900%, mostly due to an increase in the number of high-value commercial property claims.

The NSW fire service counted 269 battery-related fires last year. And Victorian firefighters were responding to at least one significant lithium-ion battery incident each week.

From 2017 to last October, the ACCC received 231 product safety reports linked to the batteries and was notified of 23 supplier-led product recalls, with 20 due to fire risk from overheating or short circuiting.

The Insurance Council of Australia (ICA) says recent battery fires underscore the need for cover.

“While the popularity of e-scooters and e-bikes continues to grow, it’s important that owners are aware of potential risks and have the right insurance coverage … as improper use, charging and storage of devices with lithium-ion batteries have, unfortunately, resulted in injuries and property damage.

“ICA encourages owners to review insurance coverage, prioritise safe storage and charging, and adhere to building regulations.”