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- [00:03]
A
This is a Frontier Forum brought to you by Latitude Studios.
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There's a trope in energy about the coal miner who goes down to work in the mines because his dad did it and his dads did it before him and so on. Jamie Daggett has a similar story, but for clean energy.
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A
My dad was a chemical engineer, environmental lawyer. His dad, so my grandpa was a civil engineer. My mom's side, I had an uncle and aunt working in Los Angeles, Alamos at the national labs in fusion. And so I always kind of thought that I would get into some environmental path.
- [00:41]
C
So you were exposed to fusion at an early age. And national labs, what were your dinner table conversations like?
- [00:46]
A
They were always really interesting and at the time it was just kind of normal actually. My uncle was one of these first thought leaders in fusion, trying to get the spherical target for fusion, you know, down to the nanometer of smoothness. And so when we were talking about that, it just felt like, you know, here's what people do when they grow up.
- [01:09]
B
Jamie pursued mechanical engineering at Stanford and he graduated in 2004, which was a really special moment for energy in Silicon Valley. Tesla had just built the roadster prototype. Bloom Energy, then called Ion America, was adapting space based fuel cells for buildings and and startups were adapting laptop batteries for the grid. For the first time, Jamie was exposed.
- [01:28]
A
To all of it and it was a really exciting time for me. It motivated me to dive into the clean energy industry and get into startups and fuel cells, electrolyzers, batteries. You know, I spent about 12 years launching, testing products as a wrench turning mechanical engineer at five different startup.
- [01:55]
C
So how does a mechanical engineer with that level of technical expertise get into insurance?
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A
Well, I was in Silicon Valley, you know, there was Googles and Apples and so I thought, I'm going to start doing a startup company, I'll be one of the first ones there. About five startups later and three buyouts later, I realized the startup world in energy was much different than Google. It was more of a pay decline type of buyout rather than a million dollar buyout you see in the tech world.
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After years of ups and downs at five different companies, Jamie was looking to settle into something more stable. So he transitioned into independent engineering, writing bankability reports for leading battery suppliers.
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A
And so that role gave me a front row seat to the risks and opportunities around utility scale storage and also around the whole renewable ecosystem.
- [02:51]
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And then out of the blue, Jamie got a message. It was from a senior person at the insurance provider, Ariel Green, who asked, have you ever considered insurance he hadn't, but he looked into it and he realized all those years inside risky startups and then assessing risk from the outside set him up perfectly for the role.
- [03:11]
A
And so looking back, it actually made perfect sense that everything I'd learned in engineering and startups and channeling that same type of mentality into a new tool, which was insurance to help accelerate the clean energy transition.
- [03:28]
B
I'm Steven Lacy, and in this episode, produced in collaboration with Ariel Green, we explore the critical role of insurance in unlocking growth in energy storage and other clean resources. Renewables and batteries are now dominating new capacity additions, but the industry is still evolving its approach to risk. I sat down with Jamie Daggett, Ariel Green's lead for storage and fuel cells, to chat about where those risks are and strategies to manage them.
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A
You know, insurance is another tool that we can use to help grow the clean energy market. I do feel like it plays sort of a unsung role behind the scenes, enabling big change.
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C
And so what were some of the risks? How would you categorize the risks that you see with the technologies you've been assessing?
- [04:22]
A
You know, you can kind of break down the risks into different categories. So as companies get their systems from the lab scale out into the field, you know, they're launching new products and things fail. There's a bathtub curve in early risks. Equipment might fail, there's software, there's hardware, there's mass defects of manufacturing, because as new products roll out, things go wrong. So that's more of the typical type of risk. And then there's also the more commercial type of risk. Many companies that are out there right now, or I would say most all companies, put warranties behind their product. So PV modules, for example, have all standardized on 25 or 30 year warranties. But most all of those companies have not been around for 25 or 30 years. Same thing with batteries. They're guaranteeing their product for 15, maybe 20 years, although their product may be in the field for a maximum of three or five years. So the commercial side risk is they're guaranteeing something that they haven't proven commercially. And so there's a lot of liabilities that are out there if something goes wrong, either in the near term or in the long term. And we cover those types of risk at Ariel Green.
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C
So let's talk about a phrase that a lot of people in this industry know well, the valley of death. This is a very difficult space for many startups that are scaling to potentially commercial scale. Just, can you talk about your experience in the Valley of death, why that phase is so difficult and where insurance comes in.
- [06:01]
A
When people talk about the valley of death, they're talking about that brutal gap between proving a technology works and actually getting it financed at scale. So on one side you've got venture capital, private equity, government grants that are helping these startups get through the lab and early testing. And then on the other side you've got project finance, the big banks that are waiting for proven bankable technologies. And right in the middle, that's where many clean energy companies stall out. So what insurance can do to help bridge that gap is focus on providing a credit worthy backstop so that the performance guarantees that the company's making are now held by a high credit rated insurance company rather than a non creditworthy supplier. So in plain terms, a supplier will say our systems will deliver this much energy for this many years. And investors and lenders don't just have to take their word for it. They can look at the backing from Lloyd's of London, which is, you know, Ariel Green, where Lloyds of London syndicate with a double A credit rating standing behind that promise.
- [07:19]
C
And what are the types of technologies or companies you're seeing currently trying to cross this valley compared with maybe a decade or two ago from the beginning of your career?
- [07:31]
A
Great question. So there are more mature technologies, let's call it PV modules have matured, polycrystalline technologies are mature. There's lots of companies and we insure many of those companies, but they're not trying to cross the valley of death, they're competing on price, driving down their margins. The ones that are trying to get across the valley of death are the new entrants. Think of the non lithium battery suppliers, some of the long duration battery suppliers, many of the bioconversion companies that are out there that have a newer technology that may not be proven. There's a definition for first of a kind saying that they have systems that have been in the field at a commercial quote, unquote commercial scale for six to 12 months. And you know, they're trying to scale up. So those types of companies really are the ones that are at risk because many of the project financiers don't want to come in and invest big capital into a project like that. And so what we're trying to do is build the confidence that if their technology doesn't work, or even worse, if the company's no longer around, there will be an insurance backstop and some of these larger investors will, will get some recourse if there's A failure.
- [08:54]
C
And you can look at insurance a couple different ways. One is to see it as protection against failure. Another is to see it as a tool for really building confidence across the capital stack so that capital flows faster. How do you see it?
- [09:08]
A
It really is both. On one hand, insurance is about protection. Everyone's familiar with equipment replacement coverage, especially in battery storage, where new battery products and chemistries, they are constantly being rolled out. If a system fails early or degrades faster than expected, insurance can help recover those losses. That's the safety net piece. But just as important, and maybe even more important, is the confidence it builds. So for lenders and investors, the insurance isn't just protection, it's an enabler. So most clean energy suppliers and project companies also don't have a credit rating, so that makes it hard for capital to flow. So stepping in as a backstop on those projects or for those project developers, insurance effectively lends its own credit worthiness to the project so that it builds confidence. In our case at Ariel Green, it means the weight of Lloyd's and the AA rating standing behind the project.
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C
So can you tell me a little bit more detail about the different insurance policies that you offer and how much of that is actually customized based upon customer needs?
- [10:21]
A
So that is a good question. Our two main types of products, our insurance products are one for the suppliers. We backstop the supplier warranties and the suppliers benefit from those if their equipment fails and they need to replace that equipment. And the buyer benefits in the case that the worst case scenario happens and that supplier goes out of business. This happened this year with Pawan, and we've been insuring PAU Systems. And so as soon as they filed their chapter 11, the buyers reached out and said, what happens now? And our insurance policies worked exactly like they were supposed to and continued coverage. And now the buyers can come directly and place a claim directly on the insurance policy as the named beneficiary. So product one is really meant for the suppliers, and then product two is meant for the buyers at the project level, with the main beneficiary being the banks. They're looking to maintain revenue at their project. And if there's some shortfall in production, if the system's down for extended periods, that that project is not going to be making the expected revenue and they won't be able to pay back their debts and maintain their debt service. So those are really the two types of products we offer.
- [11:43]
C
So let's talk about some specific examples. Earlier this year, as you mentioned, Pawan, a large storage integrator, Went bankrupt. Happened in a very fast period of time. I know some of those projects in their portfolio had aerial green insurance. So what happened to the projects that did have insurance and how did the outcome differ from those that didn't?
- [12:04]
A
Pawan is a fascinating example and it hit close to home for me as I'm based in Portland, Oregon, right down the road from their headquarters. What makes this story stand out is how quickly things unraveled for PAU. So they received a 200 million or so capital injection from KKR, one of the biggest names in private equity, as a backer, and then only a few months later they filed chapter 11. So what happened? It's still open question, but in my view it came down to mismanagement. At powen, they were chasing short term growth and profits without putting enough emphasis on long term risk management. You know, they pound pointed to tariffs on Chinese cells as a factor because they were using Chinese cells and importing those cells. And I'm sure that pressure was real. But other US integrators like Tesla and Fluence face a similar supply chain realities and have managed to stay afloat. So clearly there was some deeper structural issue with powen. But this case with Powin underscores an important truth that being a battery supplier is a brutally tough business. Margins are thin, technology is evolving fast. There's lots of competition and risk, whether technical, financial, operational. And that's exactly where insurance can help blunt this impact. So you know the, you know the question you asked about coverage of the PA projects versus those that weren't covered? We did have PA coverage in place. A good example is one with Invenergy, one of the largest US developers of wind, solar and storage. They were developing a project in Mexico. They required POWEN to carry performance insurance from Ariel Green, which we had in place. Invenergy was the named beneficiary on this policy. When POWEN went bankrupt, Invenergy didn't lose their safety net and they can now file claims directly on if equipment fails or underperforms. And you can compare that to project owners who didn't have that coverage. And they're the ones who are now calling us to see if they can get coverage in place. There have been others who are participating and trying to fix in the aftermath, like Flexgen who stepped in. They purchased many of the rights to service many of the PAU and portfolio, but they're not covering the warranties. And so this leaves project owners exposed. And it's exactly where Ariel Green comes in because we're working with those project owners to design Insurance solutions that can step in where the warranty's left off.
- [14:49]
C
So what is the status quo then? That creates a level of risk.
- [14:54]
A
The status quo is for buyers to identify the risk tolerance and then work with the supplier on defining their warranty. So they purchase standard warranties from the battery suppliers and then in most cases will pay the supplier for extended warranty fees to extend that warranty out. In some cases, the buyers manage their own risk and don't buy the extended warranty. In other cases, they purchase performance insurance from us as a replacement for the extended warranties. But in the status quo, much of this risk has been put onto the supplier. And from our experience, you know, the first thing you learn being in insurance and as an insurance company is that many companies go out of business. They come and they go. We've been insuring PV module manufacturers for nearly 15 years. And if you look back a decade, fewer than 20% of the leading solar suppliers from that time are still around today. And we expect to see something similar in the battery storage and other clean technologies. So that's why we don't focus just on the supplier name. Our diligence is centered on the technology itself. Does it work? Will it last 10 to 15 or even 25 years? Because the hard truth is a supplier may not be around for the life of the project. So what we do and what we provide as insurance providers is give the project owners and investors confidence that even if the supplier disappears, there's still a safety net. It might mean a cash payout, or it might even mean covering the cost to replace equipment from a new supplier down the road. But either way, insurance helps the projects build that confidence so it doesn't grind to a halt just because a once leading company's failed to endure or had to file chapter 11.
- [16:54]
C
I'd like to hear your thoughts on the Moss Landing fire and what that fire told us about the technology and safety risks in storage.
- [17:04]
A
Moss Landing fire was a real wake up call for the industry. It showed us no uncertain terms that fire risk is real. You know, the event resulted in about $400 million in insurance losses and thankfully, no one was hurt. But that was a striking event where the project was built to fire codes of the time and it's still burned to the ground. So since then, we've seen some big improvements. For one, system design has changed. Instead of housing huge banks of batteries in a single warehouse, new projects are often containerized. They have set spacing requirements, all of those, and even improved fire safety mechanisms inside the containers with no Access to humans, can't access the internals. All these are big safety improvements. On the technology side, the industry has been moving away from NMC chemistry, which was the type of battery chemistry, lithium ion battery chemistry used at Moss Landing, towards LFP chemistry, which has a lower fire risk of thermal runaway. Finally, NFPA actually just announced today they have these new guidelines and codes, which is the national fire Protection Agency 2026. It provides better guidance on full scale fire testing and UL9540A compliance for both fires and explosive gases that will hopefully be adopted broadly. So good news is battery safety has advanced significantly, but the challenge is scale. With so many more projects being built today, even rare events like fires or explosions will still continue to happen. But each one pushes the industry to raise the bar a little higher on safety.
- [18:54]
C
And so I guess the other set of risks are policy risks. We're seeing massive changes in our trade policy with tariffs, foreign entity of concern rules that we're also seeing tax credit changes. How do you factor those risks into thinking about insurance policies?
- [19:15]
A
Tariffs, FIAC rules, tax credit changes? There's no question they've all added friction to the storage market this year and the renewables market more generally. We've seen delays, higher costs, definitely uncertainty in the market. But at the same time, this industry is no stranger to policy whiplash. Over the past few decades, clean energy is weathered. Lots of shifts in policy, some setbacks, some tailwinds, and the market has continued to grow. So that's the perspective we try to take at Ariel Green. You know, battery projects are designed to last 20 years or more, which means there'll be multiple administrations, new rules, plenty of ups and downs along the way. And our job is to help protect the owners and investors for this long horizon. So insurance is meant to provide that layer of stability even when policy environment gets bumpy and challenges come up. It's meant to provide that safety net and keep capital flowing and projects moving forward.
- [20:21]
C
We're seeing a lot of action right now in the long duration storage space. And those various technologies and 8 hour plus storage present some unique technical and financial risks. What are they? How do you think about ensuring them?
- [20:37]
A
Long duration storage is one of the most exciting frontiers right now. And it's not just hype. We're already seeing traction. For example, Ariel Green has been ensuring all of eos's deployments since the start of this year. We've been actively supporting projects as they scale. I also have a personal connection to the space. I worked at ESS here in Portland. It's a flow battery startup. And from the insurance side, what we want to see is proof of operation at commercial scale, typically six to 12 months before we provide coverage. So that's a real challenge in long duration because only a few markets like the UK cap and floor program are really even incentivizing these longer duration projects. So as more deployments come online, we'll be watching many of these companies like Form, Energy Invinity, other flow battery companies and, and I think it's only a matter of time before we're ensuring more of these long duration technologies as they move from the pilot scale to the commercial scale.
- [21:41]
C
How long do you think the timelines are for seeing more commercial operation?
- [21:45]
A
Well, the exciting part is, and we have already engaged with many of these companies, but the exciting part is it's happening right now. Some of the very first larger scale deployments are getting announced. So the buyers are just starting to purchase some of their equipment they haven't got manufactured and put in the field yet. But I would say within the next year or two, some of the first, you know, 100 megawatt hour plus and, and in long duration the megawatt hours grow much quicker because if it's eight or 12 hours and you know, say a 50 megawatt system times eight, you already have a 400 megawatt hour system. You know, a 400 megawatt hour system could be a huge project for a new long duration company. So I'd say by 2026, 2027, we'll see some of these larger scale long duration projects just coming online and we'll definitely be watching and likely involved in some of those.
- [22:45]
C
Are there any other tech trends in storage that you're keeping your eye on?
- [22:49]
A
Right now we keep our eye on everything. So you know, you know, sodium ion is a buzzword. You know, we see sodium ion playing a part and we're already interested in seeing how that's going to participate. I think that could potentially be a replacement in the, in the near term even, you know, there's super capacitors that are competing and in some cases might have very large projects. And so you know, we've been in discussions and excited about that technology and then other non lithium type technologies. So there's thermal storage. You know, I have worked in the past at different startup companies that are exploring non lithium and so yeah, we're excited to see as they grow and keeping an eye on all those types.
- [23:39]
C
And so the industry has matured drastically over the last decade or two. Have companies matured in their and gotten smarter about how they think about risk.
- [23:50]
A
Absolutely. I used to, you know, even two, three years ago, I would typically be interacting most with engineering leads as they evaluate their risk, or even, you know, C suite CEOs who are trying to take a holistic view. And within the last year or two, you know, the counterparts that I interact with at some of the suppliers and project developers have titles like VP of Risk or VP of Insurance and Risk, which I think goes to show that they're now focusing on long term risk planning and hiring in experts in house so that they can get the right insurance in place and they can manage their risks and understand, you know, having that internal understanding makes it much easier to communicate and build a program that works for the long term. So the short answer is yes. It feels like in some ways the energy storage market is growing up because they're starting to plan for the future rather than just fighting to stay alive.
- [24:53]
C
When you started working on batteries and fuel cells and electrolyzers, did you imagine the scale the industry is at today?
- [25:02]
A
Yeah. Back then, thinking back to the two Tesla roadsters sitting in a lab that I went and saw, I thought, this could be really cool. I hope people start driving more electric vehicles. But it just felt like a cool idea. It was all about finding something that seemed like a cool idea and I had no idea if it was going to take off or not. I got excited about fuel cells and electrolyzers in the early 2000s. It seemed like the big thing at the time, but what actually happened was solar and then batteries actually took off much quicker than fuel cells did. And so I pivoted towards energy storage. So I'm, you know, I see things growing in a way that I hadn't expected. But I'm sure 10 years from now, we'll look back and think we were just in early days of clean energy, because it'll turn into just energy. It's not clean energy anymore. It'll just be how things are done.
- [25:58]
C
Well, Jamie, you have convinced me to pay far closer attention to the insurance market. Jamie Daggett, thank you so much.
- [26:04]
A
Thanks, Steven. It's been great.
- [26:08]
B
Jamie Daggett is the energy storage and fuel cell lead advisor at Ariel Green. This episode was produced in collaboration with Ariel Green, which helps clients reduce uncertainty by providing investment stability for clean energy projects, protecting the technologies that protect the environment. Through expertise from advisors like Jamie, the firm underwrites projects and unlocks affordable capital so that companies can scale. If you want to learn more about Ariel Green's insurance policies, backed by Lloyds of London. Go to arielgreen.com or click the link in the show Notes.