Trend watch: Energy storage safety & thermal management in 2026 — signals, winners, and red flags

Global battery energy storage system (BESS) installations surpassed 120 GWh of new capacity in 2025, a threefold increase from 2023 levels, yet the safety infrastructure protecting these systems has not scaled at the same pace. At least 14 significant BESS fire incidents were documented globally in 2025, including a 300 MWh lithium-iron-phosphate facility in Monterey County, California, that burned for over 48 hours and forced evacuation of residents within a two-mile radius. The tension between rapid deployment and safety readiness defines the energy storage industry entering 2026, and the signals emerging from regulation, technology, and market behavior will determine whether the sector manages this risk or suffers a catastrophic setback that slows the energy transition.

Why It Matters

The scale of the safety challenge is directly proportional to the scale of deployment ambition. BloombergNEF projects cumulative global BESS installations will exceed 700 GWh by the end of 2027, with the United States, China, Australia, and the European Union accounting for over 85% of new capacity. The US Inflation Reduction Act's Investment Tax Credit and Production Tax Credit provisions have driven a pipeline of over 200 GW of proposed storage projects in US interconnection queues. At these volumes, even a low incident rate produces a meaningful number of fires, toxic gas releases, and grid disruptions.

Insurance markets have responded to elevated risk. Marsh McLennan reported in late 2025 that BESS insurance premiums increased 30 to 55% year-over-year, with several underwriters exiting the segment entirely. Liberty Mutual and FM Global both tightened underwriting criteria, requiring third-party safety certifications, remote monitoring systems, and minimum spacing standards that exceed current building code requirements. For developers and asset owners, uninsurable or underinsured storage assets represent stranded capital.

Public perception presents an equally consequential risk. Community opposition to BESS projects has intensified in multiple US states, with organized resistance documented in over 40 jurisdictions during 2025. The New York State Energy Research and Development Authority (NYSERDA) reported that safety concerns were cited as the primary objection in 72% of contested BESS permit applications. A single high-profile incident in a residential area could trigger moratorium legislation that delays deployment timelines across entire markets.

Signals That Matter

Regulatory Convergence on NFPA 855 and UL 9540A

The regulatory landscape for BESS safety is consolidating around two key standards. NFPA 855 (Standard for the Installation of Stationary Energy Storage Systems) was adopted or referenced in building and fire codes across 38 US states by the end of 2025, up from 22 states in 2023. The 2026 edition introduces more prescriptive requirements for thermal runaway propagation barriers, exhaust ventilation rates, and minimum separation distances between battery enclosures and occupied structures. UL 9540A, the test method for evaluating thermal runaway fire propagation in battery systems, has become a de facto prerequisite for permitting in most US jurisdictions.

International convergence is also advancing. The International Electrotechnical Commission's IEC 62933-5-2, covering safety requirements for grid-connected energy storage, was updated in 2025 to align more closely with NFPA 855 and UL 9540A test protocols. Australia's AS/NZS 5139 standard for battery installations was revised to incorporate thermal runaway propagation testing. China's GB/T 36276 standard for lithium-ion battery energy storage systems added mandatory cell-level thermal abuse testing in its 2025 revision.

Shift from Suppression to Prevention

The industry is transitioning from fire suppression (responding to thermal runaway events) to fire prevention (detecting and interrupting the cascade before it propagates). This shift is driven by recognition that conventional fire suppression systems, including water mist, clean agent, and aerosol systems, have demonstrated limited effectiveness once multi-cell thermal runaway propagation begins. Post-incident analyses of BESS fires in Arizona (2019), Liverpool (2020), and California (2025) consistently found that suppression systems delayed but did not prevent full enclosure involvement.

Early detection technologies that identify pre-runaway conditions (elevated temperatures, off-gassing, impedance changes, and internal short circuit signatures) before thermal runaway initiates are attracting significant investment. The US Department of Energy's Energy Storage Grand Challenge allocated $45 million to early detection and prevention research in fiscal year 2025. Detection systems targeting hydrogen, carbon monoxide, and volatile organic compound emissions at parts-per-billion sensitivity have demonstrated the ability to identify failing cells 5 to 30 minutes before thermal runaway onset, providing actionable intervention windows.

Lithium-Iron-Phosphate Dominance and Its Safety Implications

Lithium-iron-phosphate (LFP) chemistry now accounts for over 90% of new utility-scale BESS deployments globally, displacing nickel-manganese-cobalt (NMC) chemistries that dominated through 2021. LFP's thermal runaway onset temperature (approximately 270 degrees Celsius versus 210 degrees Celsius for NMC) and lower energy release during runaway events have contributed to improved safety profiles. However, LFP is not immune to thermal runaway, and the perception that LFP systems are inherently safe has in some cases led to reduced safety investments. The Monterey County incident involved an LFP system, underscoring that cell chemistry alone does not eliminate risk. Contamination during manufacturing, mechanical damage, overcharging, and external heat exposure can trigger thermal runaway in any lithium-ion chemistry.

Winners

Thermal Management System Providers

Companies delivering advanced liquid cooling systems for BESS are capturing outsized market share as air-cooled architectures reach their thermal limits at increasing energy densities. Vertiv reported a 65% increase in BESS thermal management revenue in 2025. Modine Manufacturing expanded its liquid cooling product line specifically for energy storage applications, securing supply agreements with three of the five largest US BESS developers. The shift from air cooling to direct liquid cooling enables tighter cell temperature uniformity (reducing thermal gradients from 8 to 10 degrees Celsius in air-cooled systems to 2 to 3 degrees Celsius in liquid-cooled configurations), which both extends battery life and reduces the probability of localized hot spots that can initiate thermal runaway.

Early Detection Technology Developers

Startups focused on BESS-specific gas detection and predictive analytics are raising significant capital. Nexceris, which developed a lithium-ion battery off-gas detector (the Li-ion Tamer), secured partnerships with Fluence, Tesla, and multiple independent power producers. The technology detects vented electrolyte decomposition gases at concentrations below 1 part per million, enabling automated shutdown and ventilation activation before thermal runaway propagates. Xalt Energy and Soteria Battery Innovation are commercializing cell-level safety architectures that use internal current collectors designed to fail safely under short-circuit conditions, limiting heat generation at the point of origin.

Independent Testing and Certification Labs

Demand for UL 9540A testing has created a capacity bottleneck, with wait times exceeding six months at major testing facilities in 2025. UL Solutions, TUV Rheinland, and Intertek have all announced laboratory expansions dedicated to energy storage safety testing. DNV reported a 120% increase in BESS safety advisory engagements in 2025. As insurers and permitting authorities increasingly require third-party validation, the testing and certification segment is positioned for sustained growth.

Red Flags

Compressed Commissioning Timelines

The rush to capture ITC deadlines and interconnection queue positions is leading some developers to compress commissioning timelines, reducing the duration of safety system verification, thermal performance validation, and operational readiness testing. Industry veterans report instances of BESS projects energized within days of final equipment installation, bypassing the 30 to 90 day commissioning protocols recommended by manufacturers and safety standards. This pattern mirrors conditions preceding several historical BESS incidents where inadequately tested protection systems failed to respond as designed.

Supply Chain Quality Variability

The rapid scaling of LFP cell manufacturing, particularly among second- and third-tier Chinese producers, has introduced quality variability that safety testing at the system level may not fully capture. Cell-level defects including metallic contamination, electrolyte leakage, and separator inconsistencies are manufacturing quality issues that can manifest months or years after deployment. Tier-one manufacturers (CATL, BYD, EVE Energy) maintain defect rates below 10 parts per million, but industry analyses suggest some smaller manufacturers operate at 50 to 100 parts per million, increasing the probability of field failures at portfolio scale.

Regulatory Lag in Emerging Markets

While the US, EU, and Australia have advanced BESS safety standards, several high-growth markets lack equivalent regulatory frameworks. India, which added over 5 GWh of battery storage in 2025, has not yet adopted comprehensive BESS-specific fire safety standards. Several Southeast Asian markets permit BESS installations under general electrical codes that do not address thermal runaway scenarios. Projects deployed under weak regulatory regimes face elevated safety risk and may also face retroactive compliance requirements as regulations develop, creating financial exposure for early movers.

Insufficient First Responder Training

Fire departments in many jurisdictions where BESS projects are being sited have limited experience with lithium-ion battery fires, which behave differently from conventional structure fires. Battery fires can reignite hours or days after initial suppression, produce toxic hydrogen fluoride gas, and require sustained water application volumes that exceed typical apparatus capacity. NFPA and the Energy Storage Association have developed first responder training curricula, but adoption remains uneven. A 2025 survey by the International Association of Fire Chiefs found that only 23% of fire departments with BESS installations in their jurisdiction had completed specialized battery fire training.

What to Watch in the Next 12 Months

Three developments will shape the safety landscape through early 2027. First, the outcome of ongoing UL standards development for cell-level safety testing (UL 9540B, currently in draft) will determine whether system-level testing alone remains sufficient or whether cell-level thermal abuse certification becomes a market requirement. Second, insurance industry underwriting criteria will likely formalize into published minimum safety standards that function as de facto regulations, potentially exceeding code requirements in stringency. Third, the first large-scale deployments of sodium-ion battery storage systems, which offer fundamentally different thermal characteristics (no thermal runaway propagation under standard abuse conditions), could begin shifting the safety paradigm for utility-scale applications.

Action Checklist

• Verify that all BESS installations meet current NFPA 855 and UL 9540A requirements, including the 2026 edition provisions
• Evaluate thermal management systems against energy density projections for the next 5 years
• Require cell suppliers to provide manufacturing defect rate data and third-party quality audit results
• Install gas detection systems capable of identifying pre-thermal-runaway off-gassing at parts-per-billion sensitivity
• Establish commissioning protocols with minimum duration requirements and documented safety verification steps
• Coordinate with local fire departments to ensure BESS-specific training and pre-incident planning
• Review insurance coverage terms against current underwriting requirements and anticipated tightening
• Monitor sodium-ion battery safety data as an emerging alternative for risk-sensitive applications

Sources

• BloombergNEF. (2026). Global Energy Storage Market Outlook 2026-2030. New York: Bloomberg LP.
• National Fire Protection Association. (2026). NFPA 855: Standard for the Installation of Stationary Energy Storage Systems, 2026 Edition. Quincy, MA: NFPA.
• US Department of Energy. (2025). Energy Storage Grand Challenge: Safety Research Portfolio and Outcomes Report. Washington, DC: DOE.
• Marsh McLennan. (2025). Battery Energy Storage Insurance Market Review: Underwriting Trends and Risk Assessment. New York.
• UL Solutions. (2025). UL 9540A Test Method Results Summary: Thermal Runaway Fire Propagation in BESS, Annual Compilation. Northbrook, IL.
• NYSERDA. (2025). Community Acceptance of Energy Storage Projects: Permit Analysis and Public Comment Review. Albany, NY.
• DNV. (2025). Battery Energy Storage Safety Advisory: Incident Analysis and Best Practices Report. Oslo, Norway.
• International Association of Fire Chiefs. (2025). First Responder Readiness Survey: Lithium-Ion Battery Energy Storage Incidents. Fairfax, VA.