Lloyd's Features NER in Report: Renewable Energy Risk and Reward- Risks and Technologies

Renewable Energy Risk and Reward: Risks and Technologies, co-produced by Lloyd's, Imperial College London, and Oxford Energy Associates, features NER on page 10. Scroll to the bottom of this webpage to download the full report.

 

The text of the NER feature is included here:

Performance insurance solutions for breakthrough technologies

Innovation comes with risk, but that should not stop companies from paving the road to the future. New Energy Risk (“NER”), a California-based MGU, works with pioneers in the new-energy arena to support technology breakthroughs, advancing the critical projects needed to accelerate the transition to sustainable energy. To do so, NER structures customised performance insurance products that seek to mitigate technology risk for clients, and their customers and lenders as a result.

NER-developed policies are underwritten and issued by one of the affiliated insurance companies of AXA XL (S&P AA-) and administered by its subsidiary Complex Risk and Insurance Associates, LLC, licensed in California (#0I24307). Policies stand behind the client’s technology performance and ultimately protect project debt-lenders or end-customers from certain losses associated with the underperformance of an asset. By incorporating a double-trigger mechanism—wherein the technology has to perform below a pre-determined, conservative threshold, and the technology provider has to default on performance warranties that match or exceed the insurance terms—the policy seeks to align the interest of developers, customers, and investors with the insurer to provide technology risk transfer to the insurer, without introducing moral hazard or misaligned incentives.

With a team of scientists and insurance professionals, NER has developed a data-driven methodology for evaluating technical risk, bringing a new class of diversified risk to the insurance market. The company’s proprietary modelling uses Monte-Carlo analysis techniques that simulate a range of potential project outcomes to assess uncertainty around performance and reliability of a client technology, including the impact on relevant economics. The result is well-structured and profitable packages delivered in conjunction with insurance partners, and client access to financing that is minimally dilutive and optimally priced.

In only five years, NER’s clients have already deployed over $2 billion in capital, supported by AXA XL’s insurance companies, and their global reinsurers, including various Lloyd’s syndicates. NER’s diverse and global client-base represents a wide range of technologies and industries, from fuel cells and waste-to-value to nuclear medicine, all focused around the mission of mitigating global challenges through smart business. Clients include:

  • Fulcrum BioEnergy, a trash-to-biofuel developer building their first commercial facility in the US;
  • Bloom Energy, the leading supplier of solid-oxide fuel cells for reliable, resilient, and cost-effective on-site electricity;
  • RES Polyflow, an innovative plastic waste-to-fuel technology company building a recycling project in the US; and
  • SHINE Medical Technologies, a development-stage company working to become the world’s leading producer of medical isotopes.

Learn more about New Energy Risk at www.NewEnergyRisk.com

 

 

###

 


New Energy Risk, SHINE Medical Technologies Partner on Innovative Insurance Solution That Supports Financing of One-of-a-Kind Nuclear Medicine Facility

MENLO PARK, Calif.March 10, 2020 /PRNewswire/ -- New Energy Risk (NER), one of the leaders in customized insurance solutions for breakthrough technology projects, today announced that it has provided SHINE Medical Technologies, a development-stage company working to become the world's leading producer of medical isotopes, with an innovative performance insurance program for SHINE's groundbreaking production facility. The insurance solution provided by NER is a key component of SHINE's project financing and execution strategy.

SHINE's patented, proprietary isotope production process uses a safe, cost-effective and environmentally friendly technology to produce a variety of medical isotopes, including molybdenum-99, or Mo‑99, which is relied on for more than 40 million medical procedures every year. Roughly one percent of all Mo-99 in the world decays every hour, so it must be produced continuously. Current production is limited to a handful of government-owned nuclear research reactors, the majority of which are overseas. SHINE's facility will be the first non-reactor producer of Mo-99 in the United States. The facility will be capable of satisfying one-third of global patient need for Mo-99. SHINE's use of fusion technology solves the major problems caused by limited access to nuclear reactors and provides the potential to improve the lives of more than 1 billion people during the next 50 years.

To finance this development, SHINE raised capital from Deerfield Management Company and Oaktree Capital Management L.P., and approached NER, an affiliate of the global insurance group AXA XL, to design a custom performance insurance policy that would mitigate technology risk in this revolutionary project. NER utilized its proprietary technoeconomic analysis to extensively assess SHINE's technology, then developed an insurance product and monitoring schedule that covers the commissioning and output of the facility. This is the first time such a performance insurance product has been designed for a private medical isotope technology.

"2019 was SHINE's best year yet from a project finance and execution standpoint," said Greg Piefer, founder and CEO of SHINE Medical Technologies. "New Energy Risk's technology insurance solution was an important element of our success in 2019 and we are thrilled to be partnering with New Energy Risk on this unique approach."

"We're proud to have supported SHINE in their capital raise and are thrilled to apply our bespoke insurance solution for the first time in a critical medical field," said Tom Dickson, CEO of NER. "We are on a mission to partner with breakthrough technologies solving pressing global challenges, and SHINE is among the most impactful and exciting companies we have had as a client."

This project is among NER's growing portfolio of industrial projects that have cumulatively raised more than $2 billion in capital. Apart from the production of medical isotopes, NER's diverse clients have also planned to deliver or process annually: 441 thousand tons of recycled waste, 640 million kWh of energy, 50 million gallons of non-petroleum fuels, and 314 thousand tons of avoided CO2e.

About SHINE Medical Technologies LLC
Founded in 2010, SHINE is a development-stage company working to become a manufacturer of radioisotopes for nuclear medicine. The SHINE system uses a patented, proprietary manufacturing process that offers major advantages over existing and proposed production technologies. It does not require a nuclear reactor, uses less electricity, generates less waste, and is compatible with the nation's existing supply chain for Mo-99. In 2014, SHINE announced the execution of Mo-99 supply agreements with GE Healthcare and Lantheus Medical Imaging. In 2015, with the help of Argonne National Laboratory, GE Healthcare demonstrated that SHINE Mo-99 can act as a drop-in replacement for reactor-based Mo-99. In 2016, SHINE received regulatory approval from the Nuclear Regulatory Commission to construct its production facility. The company began construction of the facility in the spring of 2019. SHINE has raised more than $350 million from investors and government sources.

About New Energy Risk
New Energy Risk is a pioneer of large-scale, breakthrough technology performance insurance solutions. Founded in 2010, the company provides complex risk assessment and serves as a bridge between technology innovators, financiers, and insurers. New Energy Risk has helped its customers raise over $2 billion in financing for commercializing renewable energy and new technology deployments. Insurance policies are administered through New Energy Risk affiliate Complex Risk and Insurance Associates, LLC, CA License #0I24307. To learn more, visit www.newenergyrisk.com.

About AXA XL
AXA XL, the property & casualty and specialty risk division of AXA, provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit www.axaxl.com


Flow batteries scale up to GW production

Originally published in the September 2019 edition of PV Magazine

By Benedict O’Donnell

Flow batteries scale up to GW production

new cavern of wonders is rising from the sands of Saudi Arabia. A century after transforming the global energy sector with cheap, abundant oil, the Kingdom is now building the first gigawatt-scale factory for redox flow batteries, a technology that proponents argue will slash the price of storing solar energy.

Since the basic patent protecting redox flow batteries expired just over a decade ago, dozens of tech firms have raced to develop the technology and drive down its cost. In many respects, they have succeeded. Matt Harper, president of Avalon Battery, says that prices offered by leading manufacturers have come down 80% in less than five years. Lazard, an asset manager, calculates that the levelized cost of storing electricity in some redox flow projects now overlaps with that of lithium-ion batteries, the main competition. This year, sales of vanadium-flow batteries, the most established redox flow technology on the market, have grown from double digits to just over 200 MWh of installed storage capacity.

In spite of these achievements, Alex Eller, an analyst at Navigant, points out that redox flow batteries have yet to dent the energy market. He says that most of the 7,000 MWh of grid scale storage coming online this year will be met by lithium-ion batteries, followed by pumped hydro and other established storage technologies, with flow batteries trailing behind.

“Flow battery projects have so far been relatively small scale,” said Eller. “We are only just starting to see large-scale commercial projects in the works.” While he sees many hurdles still facing the emerging redox flow industry, Eller is also convinced of the technology’s potential to reduce the cost of storing renewable energy.

Zero degradation

Undercutting the record-low prices set by lithium-ion batteries will be no small challenge. In recent years, global electronics brands including Samsung, LG and Panasonic have streamlined assembly lines capable of producing gigawatt-hours of lithium-ion batteries each year. Prices have come down faster than expected and sluggish demand for electric vehicles has led to a glut of cells now being sold at cutthroat prices to store power on the grid.

Fierce as this competition may be, flow batteries have an ace up their sleeve. Unlike the lithium-ion batteries they compete with, their electrolytes do not degrade. According to Richard Wills at the University of Southampton, what sets the technology apart is its architecture. Rather than distribute electrolytes within each cell, a flow battery separates electrolytes into external tanks and pumps the liquid through active elements that store and deliver energy. At first glance, the device looks more like a chemical treatment plant than an AA battery.

Redox flow technology raises new challenges. To function, these batteries require pumps and aqueous electrolytes that suffer from comparatively low energy densities. They also reduce the efficiency of the energy conversion process, they are unwieldy for most forms of transport, and they increase the floor space needed to house components.

But Wills says that redox flow technology can also charge and discharge batteries without degrading their performance. “The reactions undergone in redox flow batteries are surface electron transfers which are less susceptible to degrade electrodes and current collectors,” said Wills, adding that the large volume of aqueous electrolyte pumped through the cell stack also helps dissipate heat, a key burden on materials and notorious fire hazard in lithium-ion batteries. Cooler operation leads to higher safety margins, longer equipment lifetime and lower maintenance costs. On paper, this makes flow batteries safer than Li-ion technology and cheaper over the duration of a storage project.

“We have run a vanadium flow battery through 24,000 hours of very aggressive cycles and still cannot measure any degradation on the battery’s performance,” said Alex Au, CTO of Nextracker. Three years ago, the U.S. tracker supplier added energy storage solutions to its catalogue Au tested more than 40 technologies in-house to select products compatible with lifelike fluctuations in demand on electricity grids. The vanadium flow batteries made by Avalon Battery made the cut. “They even boast less degradation and a better warranty than any solar module on the market today,” said Au.

Vanadium rental shop

Back at Navigant, Alex Eller says that the extended lifetime and dependability of flow batteries should in principle recommend the technology for secluded electricity generation assets, in particular solar arrays, keen on storing vast volumes of electricity for several hours until its value peaks on the wholesale market. But the limited track record of large-scale flow battery projects has so far limited their deployment.

“Flow batteries face a severe trust issue,” said Eller. He explains that the main companies buying batteries today are risk-averse project developers. These procurement teams want to make sure that the manufacturer of the battery they select still exists in ten years’ time in case they need to replace faulty purchases. As a result, they favor working with reputable lithium-ion behemoths, rather than upstart redox flow pioneers, regardless of the long-term cost projections of the project.

In a similar display of conservatism, no established lithium-ion manufacturer has so far ventured into the redox flow battery business. Eller ventures that their reluctance is caused by market uncertainty. It remains unclear which variant of redox flow technology will come out on top. “Flow batteries using vanadium electrolytes are very good, but vanadium is expensive,” he says. The cost of the raw material already inflates capital expenditure for vanadium flow projects by over 30% and investors fear that fluctuations in commodity prices could strangle supply chains.

Matt Harper at Avalon Battery claims that creative financing and vanadium leasing schemes are making vanadium flow projects more bankable. To reassure jittery buyers, manufacturers have started securing warranties from third parties. Insurers like New Energy Risk in the United States will cover falls in battery performance over the 20-year lifespan of a redox flow project, even if the battery manufacturer goes out of business. These contracts effectively guarantee returns from an energy storage project so that its developer can trust the insurer, even if they are still growing familiar with the manufacturer.

Likewise, business solutions are dampening the risk of vanadium supply chains by allowing clients and battery manufacturers to lease their electrolyte. Vanadium producers including Glencore and Bushveld Energy are prepared to rent out the metal and recycle it, shouldering part of the capital expense of the project. “The vanadium electrolyte does not degrade and can be fully recovered at the end of the battery’s life,” said Mikhail Nikoramov, CEO of Bushveld Energy.

Harper claims that these advances have brought the vanadium flow industry to the same inflection point that geared up lithium-ion manufacturers in the 1990s when consumer electronics entered mass production. So far, redox flow batteries have filled niche applications, typically where fire safety is of particular importance. But as its price verges on that of lithium-ion batteries, Harper expects redox flow technology to storm the stationary storage market. He calculates that this growth could reduce Avalon Battery’s prices below $40/MWh, turning solar into “a truly dispatchable asset, capable of displacing all other sources of electricity on the grid.” In his view, the key to cutting costs is a mature supply chain and standardization.

Saudi Qualität

This is good news for the 70,000-square meter factory taking shape in Saudi Arabia. Its opening in 2020 will deliver over 1 GWh of redox flow storage capacity to the market each year, bringing unprecedented economies of scale to an industry that has so far had to make do with tailor-made solutions as it contends with mass-produced competition.

The Saudi plant will churn out vanadium flow batteries developed by Schmid, a German PV equipment supplier with 150 years of experience in industrial engineering. The family business branched out into redox flow batteries in 2011, commercialized its first vanadium flow battery in 2014, and set out in search of partners to scale up production.

Schmid struck a deal this year with RIWAQ, a Saudi construction firm, and Nusaned Investment, a subsidiary of Saudi petrochemicals giant Sabic, which finances technologies supporting policies set out by Saudi authorities. In 2016, the Kingdom announced its Vision 2030 plan to reduce national dependence on oil revenues, notably through massive investment in renewables. The venture brings together some of the most venerable veterans in the flow battery industry with exceptionally deep pocketed investors.

“The new Schmid deal in Saudi Arabia is very exciting,” said Maria Skyllas-Kazacos, who invented redox flow technology in the 1980s. She adds that the plant “will definitely help to provide the production scale needed to further reduce costs.”

 

###


New Energy Risk Welcomes Strategic Hires to Drive Growth & Streamline Client Experience

SAN FRANCISCOSept. 26, 2019 /PRNewswire/ -- New Energy Risk, an affiliate of global insurer AXA XL, announced the appointments of Dr. Matt Lucas as Managing Director, Business Development and Dvorit Mausner as Director of Execution. The strategic additions of Dr. Lucas and Ms. Mausner come at an exciting time in New Energy Risk's evolution, as the company surpassed $1.99B in aggregate transactional value supported by its technology performance insurance solutions.

Tom Dickson, CEO of New Energy Risk, remarked that "as we look toward the future, New Energy Risk seeks to expand its business and associated benefits to novel technologies across new sectors and geographies, and provide support for a greater variety and size of projects.   Matt and Dvorit joining our team is a pivotal moment for New Energy Risk as we expand into new technology sectors.

"As the renewable energy sector continues to explode, technology providers are increasingly looking to New Energy Risk to help take revolutionary technologies from development to deployment and commercial scale," Mr. Dickson added. "By bringing on Matt to lead business development and Dvorit to streamline operations, we expect to better serve an increasing number of clients with a more efficient process."

In his new role, Dr. Lucas will lead New Energy Risk's expansion into new technology sectors, geographies, and products. He brings both technical and commercial experience at large corporates and startups to New Energy Risk. He was previously a technology scout for a large corporation, then had operating experience in multiple hardtech university spinoffs, and exposure to public policy advising in the nonprofit sector. Dr. Lucas received his PhD from UC Berkeley in Mechanical Engineering.

Ms. Mausner will support the streamlining and management of the entire client experience. She brings experience scaling six previous operations across the for-profit, academic, and non-profit sectors. She has previously directed engagement for international fundraising and behavior-change campaigns and revitalized a 6,000 sq ft science makerspace. Ms. Mausner is also co-founder and partner of Temescal Brewing in Oakland. Most recently, she designed a pre-seed carbontech startup accelerator. Ms. Mausner studied at the University of Pennsylvania, where she earned a business certification from the Wharton School, a Master's in Philanthropy and Social Justice, and a Bachelor's in the Biological Basis of Behavior.

New Energy Risk has also promoted other personnel. Sherry Huang is now Chief Actuary, and Brentan Alexander assumes the role of Chief Commercial Officer in addition to his existing role of Chief Science Officer.

Visit the www.newenergyrisk.com/team to learn more about Dr. Lucas and Ms. Mausner, and to connect with New Energy Risk via [email protected].

About New Energy Risk
New Energy Risk is a leading provider of performance risk solutions for breakthrough energy technologies and a pioneer in the development of large-scale technology performance insurance. The company was founded in 2010 to provide complex risk assessment and serve as a bridge between technology innovators and insurers. Since then, New Energy Risk has supported project finance transactions in aggregate value of over $1.99 billion for renewable energy and new technology deployments. New Energy Risk is an affiliate company of AXA XL. To learn more, visit www.newenergyrisk.com.

About AXA XL
AXA XL provides insurance and risk management products and services for mid-sized companies through to large multinationals, and reinsurance solutions to insurance companies globally. We partner with those who move the world forward. To learn more, visit www.axaxl.com

 

##