Data centers increasingly rely on on-site power generation and storage, but this trend brings a significant uptick in fire risk. As data centers expand their use of lithium-ion batteries and turbines, insurers like MSIG USA are raising alarms about a tenfold increase in potential fire hazards. This development presents both a management challenge for operators and an underwriting issue for insurers, as municipalities increasingly require bring-your-own-power solutions.
What Happened
According to Tyler Ahrenhold, head of MSIG USA's construction and inland marine division, data centers with on-site power generation systems are at a higher risk for fires and explosions compared to those solely connected to the grid. These risks are exacerbated by the use of lithium-ion batteries, which are prone to thermal runaway—a self-sustaining fire that is difficult to control. The Allianz report supports this concern, noting that fires account for half of the $815 million in claims from their loss database.
Ahrenhold emphasizes the importance of best practices, such as maintaining a minimum spacing of 100 feet between power sources and nearby buildings, to mitigate these risks. However, he notes the lack of regulatory codes addressing these specific safety measures, leaving much of the responsibility on insurers and operators to ensure safe deployment.
What This Means for Your Business
For AECM professionals, the increased fire risk associated with on-site power generation in data centers underscores the need for meticulous planning and compliance with best practices. Insurers are scrutinizing these factors more closely during underwriting, and the potential for higher insurance costs looms large. This environment necessitates a robust approach to risk management, including the adoption of safer battery technologies like iron-air batteries, which Google is already exploring.
The potential for increased insurance premiums and compliance costs could impact ROI for data center projects. However, those who proactively address these risks may find opportunities in the form of competitive advantage and better positioning for federal and municipal projects.
What US Operators Should Watch
Decision-makers should monitor the evolving landscape of safety regulations and insurance requirements for data centers employing on-site power systems. Additionally, staying informed about advancements in safer battery technologies could offer strategic advantages. Operators should also be aware of the specific risks associated with their geographic location, particularly in areas prone to severe weather events, to ensure their facilities are adequately fortified.
Source: https://www.facilitiesdive.com/news/on-site-power-storage-raise-fire-risk-tenfold-insurer-says/830120/. Read the original story ->
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