Energy Storage Site Selection and Safety Assessment: Site Types and Risk Indicators

In recent years, the deployment of energy storage systems has accelerated at an unprecedented pace—both globally and in Taiwan. Across regions, this momentum is driven by diverse policy, climate, and infrastructure needs. In the European Union, stricter decarbonization requirements have reinforced energy storage regulations; in the United States, data centers and healthcare facilities facing surging electricity demand and heightened safety requirements increasingly regard energy storage as critical backup infrastructure.

Meanwhile, the Middle East and Southeast Asia are turning to energy storage to enhance grid resilience amid extreme climate conditions. Each region is adopting different technologies and deployment strategies to meet next-generation power demand.

In Taiwan, rising renewable energy penetration and higher grid stability requirements are rapidly expanding energy storage installations from remote industrial zones into urban areas, research institutions, and large commercial complexes. At the same time, regulatory frameworks, insurance requirements, and supervisory review standards are becoming increasingly stringent.

As energy storage evolves from a supplementary power solution into a core component of national infrastructure, site selection has emerged as a decisive factor in determining safety risk. Densely populated areas offer minimal tolerance for risk, remote sites face harsh environmental challenges, and critical facilities such as data centers and hospitals demand near-zero-risk system performance. Understanding how safety requirements differ across geographies and application scenarios is therefore becoming a central competitive differentiator for the next stage of the energy storage industry.

Regulatory and Standards Variations Across Deployment Scenarios

As critical power infrastructure, energy storage projects are subject to significantly different regulatory requirements depending on their deployment context. In Taiwan, for example, the government stipulates that grid-connected energy storage systems may only be installed in industrial zones, science parks, or legally registered factory buildings. Although urban commercial land and residential areas are not explicitly permitted under current regulations, projects in these locations may still proceed through special permits or case-by-case reviews.

In general, developments in urban and commercial districts must comply with multiple layers of regulation, including urban planning and building codes as well as fire safety laws. Energy storage systems are also required to meet the Ministry of the Interior's Guidelines for Enhancing Fire Safety Management of Energy Storage Systems and maintain prescribed safety distances. While critical facilities such as hospitals and data centers may integrate energy storage into existing power architectures (e.g., uninterruptible power supply systems), they are subject to more stringent requirements for power reliability and fire protection. Relevant references include Taiwan's Guidelines for Enhancing Fire Safety Management of Energy Storage Systems and, in North America, standards such as NFPA 99 and NFPA 75 issued by the National Fire Protection Association.

Industrial parks are typically classified under industrial power use and must comply with international standards—including ISO, CNS, IEC, and UL—and obtain the necessary testing and certification. Projects located in remote or offshore areas are often designated as non-urban land and must be reviewed in accordance with the Regulations on Non-Urban Land Use Control. If situated within national parks or protected areas, additional environmental impact assessments may also be required.

Overall, regulatory requirements are most stringent in densely populated or functionally sensitive areas, where projects frequently necessitate additional technical evaluations and government approvals to ensure full compliance with applicable laws and safety standards.

Insurance and Financial Risk Considerations

The recurring risks of fires and explosions associated with energy storage systems have made insurers increasingly cautious in providing coverage. Industry observations indicate that many energy storage projects struggle to secure bank financing precisely because they are unable to obtain comprehensive insurance. In densely populated areas or at critical facilities, any incident could result in large-scale personal injury and property damage, leading to exceptionally high claims exposure for insurers. As a result, such projects often face higher premiums, more stringent underwriting conditions, coverage caps, or even outright refusal of insurance.

By contrast, energy storage facilities located within industrial parks, while high in asset value, are typically surrounded by limited public activity, resulting in lower third-party liability risks and greater willingness on the part of insurers to provide coverage. Projects in remote or offshore areas may pose less third-party liability due to sparse populations, but insurers must place greater emphasis on environmental risks such as typhoons, flooding, and earthquakes. Overall, because energy storage fires are notoriously difficult to extinguish—often requiring the system to burn out entirely—rising insurance premiums have become the norm across the sector.

Social Acceptance and the NIMBY Effect

Energy storage siting frequently triggers the "Not In My Backyard" (NIMBY) phenomenon, the perception of "I need electricity, but I don't want an energy storage facility near my home." This sensitivity is particularly acute in densely populated areas, where nearby residents are more concerned about potential hazards. In Taiwan's Fengyuan District of Taichung, for example, residents strongly opposed a proposed energy storage project adjacent to a community center, citing concerns over lithium battery fire risks and noise impacts on quality of life.

Numerous cases demonstrate that even when projects fully comply with regulations, developers may still struggle to allay public fears. While some community members may recognize the importance of energy storage infrastructure, the perceived risk of accidents is easily amplified, underscoring the need for proactive safety communication and engagement. Industrial parks, typically located in concentrated manufacturing zones with fewer residents, face comparatively lower social resistance; however, workers and nearby businesses still closely monitor safety and environmental impacts. In remote or offshore areas, smaller communities may adopt a more open attitude toward energy storage, viewing it as essential infrastructure for enhancing grid resilience, yet concerns over ecological impacts may persist.

In summary, high-density areas and locations closely tied to daily public life carry the greatest social risk. Effective communication, transparency, and incentive mechanisms, such as differentiated electricity pricing or community compensation, are often seen as viable solutions. Only by balancing safety assurance with fair benefit-sharing can NIMBY resistance be mitigated and energy storage projects successfully advanced.

Energy Storage as a Cornerstone of the 2050 Net-Zero Strategy

As the global community advances toward the 2050 net-zero emissions target, governments have identified power systems and energy storage as core foundations of Taiwan's energy transition. According to the National Development Council's "Taiwan Pathway to Net-Zero Emissions in 2050," the expansion of renewable energy must be accompanied by comprehensive grid upgrades—particularly enhanced dispatch flexibility and both short- and long-term backup capacity. These capabilities ultimately depend on mature, safe, and reliable energy storage systems.

Across Europe, the United States, Japan, and Asian economies confronting increasingly extreme climate conditions, renewable energy development is no longer limited to expanding generation capacity. It has evolved into a broader effort to strengthen overall grid resilience. In Taiwan, investment in this area has accelerated in recent years, supported by central government policies, increased grid spending by Taipower, and adjustments to grid operation models.

Energy storage is widely regarded as one of the most critical components of this infrastructure. The Ministry of Economic Affairs has repeatedly emphasized that energy efficiency, carbon reduction, and higher shares of green power all rely on smart grids and high-quality energy storage. Accordingly, the government has launched regional energy storage demonstration projects through foresight program budget and leveraged electricity trading platforms to attract private capital into the storage market.

The "Taiwan Pathway to Net-Zero Emissions in 2050" further underscores that the net-zero transition is not a government-only initiative, but a joint public–private investment effort. By 2030, government agencies and state-owned enterprises are expected to invest approximately NT$900 billion, catalyzing more than NT$4 trillion in private-sector investment spanning equipment manufacturing, system integration, site development, and related supply chains.

Former Deputy Minister of Economic Affairs and Acting Chairman of Taipower, Wen-sheng Tseng, has also noted that Taiwan spends the equivalent of roughly 10% of its GDP each year on imported energy. By reducing this dependence through locally generated renewable energy and energy storage systems, these expenditures could be redirected into domestic investment and technological development, while encouraging more enterprises to participate in Taiwan's evolving energy transition ecosystem.