Home battery prices fall as Tesla, Base Power vie with virtual power plants

Tesla has led the home battery market for years, but recently cut the monthly price of its Powerwall leasing plan by more than two-thirds, an apparent response to competition. Base Power, a startup, has raised $2 billion in less than a year and is installing 8 megawatt-hours of batteries per day.

Home batteries typically cost more than $10,000 installed, putting them out of reach for many homeowners. In Texas, though, homeowners can now lease 27 kilowatt-hours of Tesla Powerwalls for $35 per month, or 39.2 kilowatt-hours of Base Power batteries for $19.

The low prices are possible because of falling battery costs and virtual power plant (VPP) technology. A VPP aggregates distributed energy resources such as batteries and water heaters so thousands of devices act as a single power plant on the grid, allowing utilities to call on them during high demand. Companies like Tesla and Base Power use their battery fleets as VPPs to help grid operators fill gaps.

The VPP market is still small at $7.4 billion, but Grandview Research expects it to top $30 billion by 2033. Traditionally, utilities handled demand spikes by building peaker plants that run only during high demand or paying large energy users to shut off. Now they can pay a VPP instead.

VPP operators charge batteries when electricity rates are low and sell stored power back to the grid when demand drives prices up. They keep a share of the profits and pass some savings to consumers as low electricity prices, cheap backup batteries, or both. Tim Pianta, head of utility partnerships at Base Power, told TechCrunch: “There are resiliency needs everywhere. Our goal is to have it be a win-win, like it’s a no brainer.”

As electricity demand grows from AI data centers and electrification, utilities and grid operators are embracing VPPs. VPPs also have a speed advantage. Building a peaker plant can take years, while VPPs can be built in months because installing batteries in homes avoids land, permitting, and interconnection delays. Base Power has a deal with CoServ, a North Texas electric cooperative, to build a 100-megawatt VPP. Pianta said a traditional 100-megawatt plant would take two to four years to come online, while Base Power is on pace to install its VPP in under 12 months.

Because VPPs use assets like batteries spread near where electricity is consumed, utilities also spend less on new power lines and infrastructure. For years, Tesla operated a VPP with Powerwall but did not market it that way to consumers, instead encouraging homeowners to charge batteries with cheap solar power during the day and use them at night. That approach helped install more than 6.7 gigawatts of Powerwalls, but newcomers like Base Power are pushing Tesla to change tactics.

Software gives VPPs another edge over utility-scale batteries, which must connect directly to the grid and face congestion and long interconnection wait times. “A distributed storage solution is able to clear both of those hurdles,” Pianta said. Nicole Tomasin, chief commercial officer at Energy Access Innovations, told TechCrunch that VPPs are gaining traction in Texas and California and are likely to spread nationwide as data centers look for faster grid connections. “As we see more hyperscalers, more data centers coming online, I think more [VPP] programs are going to be accelerated because we’re accelerating demand,” she said, adding that data centers are buying interconnect speed rather than just kilowatt-hours.