Cleve Hill: A Small Problem of Insurance

By Richard Belfield

It may well be impossible to insure the Cleve Hill solar farm – that’s the view of insurance industry veterans approached by the Faversham Eye. The immediate reaction of one hugely experienced broker was, “well no one’s going to insure that!”

At a recent planning inquiry hearing, the promoters admitted that they had not looked at the insurance issue in great detail, assuming naively that everything would be all right. They did, however, admit that unless they can get a policy, the development will not go ahead.

To do this, they will need to convince an already sceptical market to issue multi billion pound policies covering both major pollution and an open-ended health hazard. After sustaining huge losses on oil spills, industrial clean up and asbestosis, the industry has little appetite for either.

The potential risks of Cleve Hill are huge: multiple deaths, life time injury, damage to homes, factories, commercial premises, the land, the waterways as well as mass evacuation, pollution and clean up. The numbers quickly escalate into billions.

The cost of the insurance premiums will be immense and may well make the entire project unprofitable. As the plant gets older, the premiums will inevitably increase because the batteries degrade, making them a greater fire risk. They will also need to be replaced, which means they will have to be dismantled and moved, adding to the hazard.

If the inspectors give the go ahead then the secretary of state (whoever it is that week) will issue a Development Consent Order. This will have to define what sort of insurance policy is required. The terms will have to be strict. The insurance policy will need to be a standalone, with the premiums guaranteed for the lifetime of the project, whoever owns it. Otherwise the company will just go bankrupt and the UK taxpayer will have to pick up the bill.

TECHNOLOGY

The technology is still relatively new. This means that any insurer will always look at the worse case scenario: what if there is a major fire, which burns for hours, days or even weeks?

The scheme promoters constantly say the technology has been “tested”. That’s true. Unfortunately for them, the test results show that it will always fail at some point. There is an inherent flaw in li ion batteries - they spontaneously burst into flames, no matter how well they are built or stored.

The proposed Cleve Hill development will have 120 battery containers. So the issue here is not if there is a fire, but when it will happen. Before they issue a policy, insurers will look at the track record. There have been hundreds of fires from li-ion batteries - whether they are on laptops, boats or even passenger airlines. Knowing they will have to pay out at some time in the first few years will deter most insurers.

So far there have been several major fires but no major loss of life. The insurance industry is driven by statistics and the numbers suggest there will be a major catastrophe soon – and no one wants to be holding that insurance policy. There is a second problem. Insurers are always nervous round new technologies, only ever taking a small piece of the total risk, limited to what they can afford to lose. They call it the “gambling line.” The premiums are always higher and it means that a very large number of insurers will have to sign up and share the risk.

THE SIZE OF THE CLAIM

What will terrify any insurer is the size of any potential claim. The worse case scenario is a major fire, which leads to catastrophic thermal runaway and burns for hours. A strong on shore wind means most people in Graveney will die in minutes, with thousands more dying in Faversham shortly afterwards. As the gas gets diluted, the costs of the claim go up. It sounds callous, but insurers prefer death, which is a one off payment to paying for those injuries, like blindness and long term illnesses, which require a life time of expensive medical care. Open-ended lifetime care is every insurer’s nightmare as the courts are quite happy for claimants to come back and ask for more.

POTENTIAL LETHAL GAS CLOUD ZONES Insurers are very nervous about open-ended liabilities with thousands of different claims which can go on for years. If the fire continues for more than an hour (which these fires often do) the further the cloud travels and the more expensive it becomes as life long injuries cost insurance companies far more than deaths. Once the gas drops and becomes acid, the long term effect on local farmland will be catastrophic as it will take years to clean the soil.

It will take millions of gallons of water to put the fire out. This will turn the gas to acid, which will seep into the ground. The Faversham sewage works is a short distance away and once that is knocked out, the town will become uninhabitable and everyone will have to move out. Shepherd Neame takes its water from a spring below the brewery. Once this becomes polluted the business will close, probably permanently. Other major companies, like the Marks & Spencer distribution centre will also need to close, at least temporarily.

As the acid seeps into the water table it will destroy the farmland, causing long term damage to the local fruit industry.

Once the fire is successfully extinguished, the plant will need to be replaced at a significant capital cost. The evacuation of the town and the subsequent clean up, will add hundreds of millions to the bill.

The only close equivalent is nuclear. In the USA, the liability insurance for a nuclear reactor is $13 billion (£10.2 billion) and the premium for each installation is $375 million (£296.8 million).

Even if this was discounted by half, it will question the financial viability of the project.

FLOOD RISK

Cleve Hill developer CHSP often refers to the flood risk to its project as a ‘one in a thousand year’ event. But as those living nearby will confirm, flooding is a frequent threat. As recently as 29 September this year, the Environment Agency issued a flood warning affecting Faversham, Graveney and Seasalter. Immersion in water, particularly salt water, is known to trigger battery fire. Adding water to burning li ion batteries creates highly toxic hydrofluoric acid which, if it leaked, would mix with spreading flood water and contaminate the surrounding land.

FLOOD RISK Cleve Hill developer CHSP often refers to the flood risk to its project as a ‘one in a thousand year’ event. But as those living nearby will confirm, flooding is a frequent threat. As recently as 29 September this year, the Environment Agency issued a flood warning affecting Faversham, Graveney and Seasalter. Immersion in water, particularly salt water, is known to trigger battery fire. Adding water to burning li ion batteries creates highly toxic hydrofluoric acid which, if it leaked, would mix with with spreading flood water and contaminate the surrounding land.

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Richard Belfield is an investigative journalist, bestselling author and award winning film maker. He has written for the Sunday Times and Private Eye and made documentaries for every major UK TV channel as well as Discovery, National Geographic and Al Jazeera. He lives just outside Faversham.