The United States market for household savings is falling rapidly. With the return of the battery costs and the maturity of the virtual power plant model, a home-based battery system that used to be worth tens of thousands of dollars started to reach ordinary households at lower monthly rates. Tesla's recent introduction of a new Powerwall leasing programme in Texas also shows a marked increase in competition in this market.
Texas lease prices are clearly down.
In the past, household batteries were usually installed with roof PV, often at a total cost of over $10,000, mainly for high-income households. Today, Texas residents have access to energy storage facilities at lower thresholds.
- Tesla provides 27 kWh Powerwall, monthly fee $35
- Base Power provides 39.2 kWh batteries at a monthly cost of $19
TechCrunch reported that Tesla had long been a leader in family reserves, but recently was under pressure from new companies such as Base Power. The latter finance $2 billion in less than a year, and it expands fast.
Virtual power plant-led business model change
Prices can decline rapidly for two central reasons: the battery itself has become cheaper, and the virtual power plant has begun to generate stable revenues.
The virtual power plant will bring together equipment such as batteries, water heaters, which are scattered within the household, so that a large number of small-scale equipment will operate on the electricity network as a large power plant. When power peaks occur, utility companies or grid operators can call on these equipment to replenish the power.
This means that the operator can charge the battery when the price of electricity is lower and sell the power back to the grid when the demand is high and the price increases. Part of the proceeds is returned to household users in the form of low electricity prices, low monthly rents or back-up battery services.
According to Grand View Research, the market is currently about $7.4 billion in size and is expected to exceed $30 billion by 2033.
AI Data centre boosting power demand
As AI ' s data centre expands and economic electrification advances, demand for electricity in the United States rises, and utility companies ' interest in virtual power plants increases. Virtual power plants are deployed at a faster pace than new peak plants, usually for months, while traditional power plants often take years to ship.
Base Power disclosed that the company had reached an agreement with CoServ, the northern power cooperative in Texas, to build a 100 MW virtual power plant. According to the company, this size would normally take between 2 and 4 years to go online if the traditional power plant approach were used, while the distributed home battery programme is expected to be deployed within 12 months.
Since these batteries are scattered close to the point where the users actually use the electricity, additional inputs from grid companies on transmission lines and supporting infrastructure will also be relatively low.
Tesla's strategy began to adjust.
Over the past few years, while Tesla has been operating a Powerwall-based virtual power plant, this model has not been used as a major selling point for consumers, but has placed more emphasis on saving electricity costs for households through low-cost daytime or surplus solar charging and nighttime electricity.
This strategy helped Tesla to aggregate the installation of Powerwall storage systems in excess of 6.7 Giwa. However, with the rapid expansion of Base Power in a low-monthly mode, Tesla also began to adjust its approach.
It is reported that Base Power currently installs approximately 8 MW-hour batteries per day and hopes to double this rate by the end of the year. Industry figures predict that the virtual power plant model may further expand from Texas and California to more parts of the United States in the coming years, as data centres compete for faster netting.