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Lithium-ion batteries: Safe handling and storage

Lithium-ion batteries: Safe handling and storage

By: Sovereign Insurance

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Lithium batteries power many parts of everyday life. They’re increasingly used in everything from smartphones and scooters to power tools and machinery. On a larger scale, they’re used in energy-storage systems that provide backup electricity for utilities companies and commercial facilities.

While lithium-ion batteries provide many benefits – they have long lifespans, provide constant power, and are lightweight, to name just a few – they also pose a risk of fire and explosion.1

As the use of lithium-ion batteries becomes more widespread, and facilities increasingly rely on them for their own power supplies, companies need to take a close look at how to protect themselves.

To get started, here is an overview of lithium batteries, the risks they present, and how to mitigate them:

What are lithium batteries?

The term “lithium battery” refers to one or more lithium cells that are electrically connected. Lithium cells store and release power by converting chemical energy into electrical energy using lithium ions or lithium metal.2

Lithium metal batteries are generally non-rechargeable and are often used in consumer products like calculators, pacemakers, remote car locks, and watches.3 Lithium-ion batteries are rechargeable and are used in devices such as mobile phones, electric vehicles, laptops, and power tools, as well as materials-handling equipment like forklifts.4,5

What are the risks?

Lithium-ion batteries are generally safe but, like any energy storage device, they pose health and safety risks. Thermal runaway – a process that can cause overheating – is often considered the greatest hazard related to lithium-ion batteries.6

With thermal runaway, the temperature and pressure inside the battery cells increase faster than the heat can be dissipated. This can happen for many reasons, such as external heat sources (for example, open flames and heaters), short circuits, or damage to the battery. 7 Damage can occur by physical impact (for example, being dropped or punctured), improper charging, or exposure to certain temperatures (hot temperatures and below freezing).8

Thermal runaway may result in the release of corrosive, flammable, and toxic liquids, and gases, which can be harmful to people. Fire or explosion can be caused by the intense heat and flammable liquids and gases from the battery.9

How can facilities with limited amounts of lithium-ion use and storage mitigate risks?

Reducing risks related to lithium-ion batteries requires a comprehensive look at proper use, storage, transportation, disposal, and more. Here are just a few recommendations:

  • Lithium-ion batteries should be stored at charge levels below 50%. Fully charged batteries have a higher energy density and greater risk of generating significant heat from short-circuiting due to internal defects. Batteries should also be stored at temperatures between four and 27 degrees Celsius.10
  • Establish minimum distances between battery charging stations and any combustible materials. Stations for charging large-format batteries should be separated from other combustibles by at least three feet. Small-format batteries, like the ones used in power tools, should be set on a firm surface, and separated from combustibles by at least one foot.11
  • Regularly inspect batteries for signs of damage, such as bulging/cracking, hissing, leaking, or rising temperature. If there are signs of damage, safely remove the battery from service and discard in a fire-resistant bin, separate from other waste batteries.12,13
  • Make sure your workplace’s ventilation and fire protection systems comply with applicable legislation, including building codes and fire codes, as well as occupational health and safety regulations.14

What are battery energy storage systems?

Battery energy storage systems (BESS) enable energy from renewables, like solar and wind power, to be stored and then released when the power is needed most, for example, during a weather-related outage. Lithium-ion batteries are the technology of choice for large-scale plants to help electricity grids ensure a reliable supply of renewable energy.15

In Canada, this emerging technology is part of governments’ plan for more clean energy. For example, a new battery storage project in Ontario – Oneida Energy – aims to help the province have a “reliable, affordable and clean electricity supply.” The storage facility will draw and store electricity off-peak and return the power to the electric grid when electricity demand is higher.16

There are promising uses for BESS in the commercial sector as well. Commercial buildings and factories can set up their own energy-storage systems to provide power during outages and to lower electricity costs. Cost savings are achieved when a business draws energy from the grid for battery storage when hourly costs are low, and then uses that stored energy when grid costs are high (a concept called “peak shaving”).17 McKinsey & Company believes BESS has the potential to reduce energy costs by up to 80%.18

What are the risks of battery energy storage systems?

Fires caused by thermal runaway is the chief concern with battery energy storage systems. This can be caused by physical damage, manufacturing defects, improper use, and excessively hot storage temperatures. Storing large amounts of batteries together makes this situation more dangerous. The fire caused by a single battery can create a chain reaction of battery failure, which can lead to an explosion if enough batteries fail and produce heat and gas.19

How can organizations mitigate risks?

The National Fire Protection Agency (NFPA) and other expert organizations provide numerous standards, guidelines, and recommendations for battery energy storage systems. Companies are encouraged to consult comprehensive resources such as NFPA 855 (Standard for the Installation of Stationary Energy Storage System and UL 9540 (Standard for Safety of Energy Storage Systems and Equipment), as well as information from their insurance partners and other experts.

Here are just a few recommendations to prevent fires:

  • One early intervention is a battery management system (BMS), which can prevent damage to the battery cells due to overcharging. A BMS also calculates the charge remaining on the battery, monitors the temperature, and monitors for short-circuits and faulty connections. If the system detects any abnormalities, it shuts the battery down, which protects the cells from damage. A gas detection system can also be employed to shut down faulty cells, activate a ventilation system, and sound alarms.20
  • Thermal imaging can be used to monitor the battery cells and prevent thermal runaway. Thermal cameras allow operators to detect temperatures in real time and quickly identify any issues. Thermal imaging is also a useful tool for detecting manufacturing defects in lithium-ion batteries. For example, a hot spot in the battery cell may indicate a defect that’s causing the battery to generate excess heat. Early detection allows corrective action to be taken.21

See: Risk Resilient: Thermal Imaging: Electrical & Mechanical Applications

  • To prevent large and lengthy fires, NFPA 855 requires energy storage systems to be grouped into small segments and spaced apart. Since battery energy storage systems typically consist of multiple vertical racks, the aim is to contain the fire to a single rack through proper spacing, as well as the installation of a sprinkler system.22

See: What should be included in your fire safety plan?

  • Develop an emergency response plan specifically for lithium-ion fires. These fires have unique attributes and are difficult to extinguish and sometimes need to just burn out. Water or foam may appear to put out fires quickly, but they can reignite as breached cells are met with oxygen. It’s advisable to keep sprinklers running and move batteries to safe burnout areas.23

While the chance of a fire related to lithium-ion batteries is low when guidelines and best practices are followed, there are no guarantees. Reach out to your broker or insurance partner for guidance on how to best protect your facility.



1 Schumacher Electric, The Benefits of Lithium-ion Batteries,” May 5, 2023

2,12 Occupational Safety and Health Administration (OSHA), “Preventing Fire and/or Explosion Injury from Small and Wearable Lithium Battery Powered Devices,” June 20, 2019

3,4 Transport Canada, “Transportation of Dangerous Goods: Did You Know That Lithium Batteries Are Dangerous Goods?” March 2016

5 Modern Materials Handling, “Where lithium batteries will make gains,” Oct. 4, 2022

6,8,9,14 Canadian Centre for Occupational Health and Safety (CCOHS), “Battery Charging – Lithium-ion Batteries

7 Safety Skills: An HSI Company, “Lithium Batteries: Safe Handling, Storage and Disposal

10,11,13 TÜV SÜD, “Protecting Your Facility From Lithium-Ion Battery-Related Fires & Explosions

15 National Grid, “What is battery storage?”

16 Government of Canada, “Governments of Canada and Ontario Working Together to Build Largest Electricity Battery Storage Project in Canada

17 Daily Commercial News, “Inside Innovation: Battery storage for commercial buildings comes into its own,” April 19, 2023

18 McKinsey & Company, “Enabling renewable energy with battery energy storage systems,” Aug. 2, 2023

19  Control Fire Systems, “Battery Energy Storage Systems Fire Suppression” 

20 StatX, “Fire Suppression in Battery Energy Storage Systems

21 MoviTherm, “Ensuring Safety in Lithium-ion Battery Storages

22 National Fire Protection Agency (NFPA) Journal, “NFPA 855 and sprinkler protection for energy storage systems,” Jan. 1, 2020 

23 TÜV SÜD, Lithium-ion Battery Fires: Myth vs. Reality


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