Home battery prices are dropping sharply in the United States, and a wave of new competitors is challenging Tesla’s long-standing dominance in the residential energy storage market. Startups like Base Power have raised $2 billion in under a year, and the pressure has prompted Tesla to cut the monthly price of its Powerwall leasing plan by more than two-thirds. Homeowners in Texas can now lease 27 kilowatt-hours of Powerwall capacity for $35 per month, or 39.2 kilowatt-hours of Base Power batteries for $19. Traditionally, installed home battery systems cost more than $10,000, limiting them to wealthier households with excess solar generation.
The low monthly prices are made possible by falling battery costs and the rise of virtual power plants, or VPPs. A VPP aggregates thousands of distributed energy resources, such as home batteries and water heaters, so they can act as a single large power source that utilities can tap during peak demand. Tesla and Base Power use their fleets of customer batteries as VPPs to help grid operators fill gaps when electricity use spikes. The global market for this technology is currently $7.4 billion, but Grandview Research projects it will exceed $30 billion by 2033.
Utilities have traditionally relied on expensive peaker plants or paying large factories to shut down during high-demand periods to balance the grid. VPP operators instead charge their batteries when power is cheap and sell that stored electricity back to the grid at a profit during peak pricing. Operators keep a share of those profits and pass the rest to consumers in the form of lower electricity rates or inexpensive backup batteries. Tim Pianta, head of utility partnerships at Base Power, told TechCrunch that resiliency needs exist everywhere and that the company aims to create a win-win situation for all parties.
Electricity demand is growing due to AI data centers and broader electrification, which has increased utility interest in VPPs. VPPs also offer a major speed advantage over conventional power plants, which can take years to permit and build. Base Power has a deal with CoServ, a North Texas electricity cooperative, to construct a 100-megawatt VPP, a project Pianta says is on pace for completion in under 12 months. A traditional 100-megawatt plant would take two to four years to come online, and because VPP assets are located near where power is consumed, utilities can avoid costly new transmission infrastructure.
For years, Tesla operated a VPP with its Powerwall fleet but marketed it to consumers as a way to arbitrage their own solar power, charging during the day and discharging at night. That approach helped Tesla install more than 6.7 gigawatts of Powerwalls, but new entrants with simple monthly battery plans are forcing a pivot. Base Power is currently installing 8 megawatt-hours of batteries daily and aims to double that rate by the end of the year. Pianta said the company expected competition and started its business because it saw a large opportunity.
Software gives distributed battery fleets another edge over utility-scale storage, which must connect directly to the grid and face congestion and long interconnection queues. A distributed storage system can clear both hurdles, Pianta noted. VPPs are now gaining traction in markets like Texas and California, but Nicole Tomasin, chief commercial officer at Energy Access Innovations, expects them to spread nationwide as data centers seek faster grid connections. She told TechCrunch that with more hyperscalers coming online, VPP programs will accelerate because demand is accelerating, and a distributed fleet can be assembled in months against a queue that takes years.
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