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The Rise of Virtual Power Plants Amid Aging Infrastructure
As climate change intensifies, homeowners are increasingly investing in backup batteries to ensure they have power during extreme weather events. However, these solutions offer only temporary relief, pointing to a more significant issue: the aging power grids that many rely on.
In response to these challenges, virtual power plants are gaining traction. These cloud-based systems are becoming a promising avenue for companies seeking to enhance energy reliability, particularly in regions susceptible to severe weather.
One notable player in this space is Base Power, based in Austin, Texas. This startup focuses on providing battery backup solutions to homeowners while managing and optimizing energy usage.
“We install our batteries in customers’ homes to support the power grid when operational,” explained Base CEO Zach Dell. “In the event of a grid outage, these batteries provide backup power. Additionally, we can help reduce electricity costs for our customers by 10 to 20% each month.”
Unlike competitors such as Tesla and Enphase, Base operates on a rental model rather than selling home batteries. The company offers a comprehensive service that includes hardware, software, installation, and maintenance, essentially acting as an energy service provider.
“We retain ownership and handle maintenance as if the system were our own,” Dell added. This arrangement allows Base to strategically manage battery usage, tapping into lower-cost energy sources and passing those savings onto customers. Batteries are charged overnight when demand is low and discharged during peak usage times, such as summer evenings and winter mornings, providing additional support to the grid.
For a one-time fee of $595 and a subsequent monthly charge of about $19, homeowners gain access to reliable power supplied by Base. The energy they receive comes from a diverse mix of sources, including wind, solar, natural gas, and coal. Notably, nearly half of Base’s customers have solar panels installed, which not only reduces their costs but allows them to sell excess power back to Base.
A spokesperson for Base noted that customers are compensated based on the real-time wholesale energy price, plus an additional 3 cents per kilowatt-hour. These buyback rates are subject to fluctuations based on market conditions.
Base has formed a significant partnership with Lennar, one of the largest homebuilders in the U.S., which is also an investor. The company installs its batteries in around 20 Lennar developments in Texas, particularly in areas prone to power outages.
Stuart Miller, Chairman and co-CEO of Lennar, articulated the broader mission behind the collaboration, stating, “Our goal is not solely profit-driven. We aim to improve the overall landscape of homebuilding to address challenges in stress-prone markets. Utilities and electricity will play a crucial role in this mission.”
To date, Base has successfully raised $268 million from prominent investors, including Lennar, Thrive Capital, Valor Equity Partners, Lightspeed Venture Partners, and Andreessen Horowitz.
The company recently announced its first utility partnership near San Antonio and plans to expand its operations beyond Texas. However, challenges such as tariffs on batteries manufactured in China may impact growth prospects, according to Dell.
— CNBC producer Lisa Rizzolo contributed to this piece.
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