A new startup called Base Power aims to bring more stability to the volatile Texas grid by selling customers oversized home batteries at minimal costs and then using the excess capacity to trade on the market. In this episode, co-founders Zach Dell and Justin Lopas discuss their innovative business model and its potential impact in Texas and beyond.
Customers (who already own) gigantic, oversized batteries on wheels (EVs), for little more than the cost of ubiquitous V2G charger installations at large apartments & condos, neighborhood shopping centers, business parks, & various public facilities, could get more stable prices and backup power in the event of blackouts. Meanwhile, the grid could get local distributed storage that helps to stabilize it. If state sanctioned utility transmission monopoly companies & their captured public utility commissions allowed it.
I still believe that the bigger play will be solar parking lot canopies +stationary batteries +V2G chargers at large (sub)urban apartments & condos, neighborhood shopping centers, business parks, & various public facilities, like schools. Micro grids right where most consumers live & work. This can be substantially funded with IRA investment incentives anywhere in the US. No long utility interconnection or NIMBY delays, and no new transmission, land acquisition or other site improvement spending required.
Modular canopy structures will last for 75+ years, with minimal maintenance, & make cleaning & replacing solar panels easy. In my area of CA, all the new medical facilities have already done this (except V2G), and now the schools are all doing it. EV adoption will drive demand at large residential, commercial & business properties. EV owners don't charge when they get home from work; they program their charging at night or when they're plugged in to a charger at work.
On seeing another "clever" startup, I was tempted to holler, "David, one Shayle Kann is enough."
After listening, like the Harvest HP, I want two. Though, as my geotech professor said 40 years ago, "You can make really good money, only one problem, you've got to move to Texas."
Nice way to squeeze storage in NOW, not waiting for V2G, etc. I think when you had Chris Clack on 2-3 years ago he emphasized the advantages of combining distributed storage, and other load control, with cheap utility renewables. Also this rebuts your guest with that whole book about how cheap market prices would destroy renewable generation value. As you all went through, storage value and renewable value can keep feeding back in some great virtuous cycle. Just don't tell the Supreme Court.
One thing, I don't think these guys are the only game in town, though their system and pricing seem really well thought out. I think Octopus Energy offers TX battery owners $40/month if they have some particular batteries and let "The Kraken" control it. Also maybe multiple services in Australia which integrate batteries and other DER control, but probably don't buy the battery for the customer.
As far as the vertical/regulated utilities, I think the ones with lots of VRE would do this; it's partially hyper-cautious PUCs, hounded by "consumer counsels," making it even harder to innovate. I think you had someone from WeaveGrid who said as much. (The PUC allows them to run a fairly primitive program for Xcel which I use to get $10/month for scheduling my car charger, and then letting them "watch" that. Fun with apps, setting that up!)
One unspoken advantage these guys might have is that currently home batteries are expensive to buy but should they be? BNEF says LFP packs hit $139/KWH last year (with further large decreases expected this year). The battery monitoring and management electronics can be done for less than $100. What's the inverter cost? Tesla sells the version of Powerwall3 without an inverter for $1,000 less than the one with an inverter. So the guts (battery packs, BMS and inverter) of a 10KWH system is $2,500. Add a box and fans for thermal management.
Inverters and batteries are both on steep cost reduction curves so I am looking forward to the future.
Can you imagine the distributed world if we had $1/KW solar and $5,000 home batteries (or V2G)?
Is that the US price, or the international price? We have a significant distortion in the US (and India) meant to on-shore the battery supply chains, leading to much higher domestic prices. From the article (here, last November: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/) that's international price, they suggest a cell or pack premium of up to 20% for the US. But we've seen 2/3 of the solar install difference between the US and Aus from tariffs and taxes so... there is probably a step in the value chain here where local costs jump. I still think the electrical install alone is going to be more than the suggested customer outlay.
But the general point stands. You are only paying $20k for a 20kWh battery pack if you are buying retail. Presumably they'll be doing something smarter, even if it is just a bulk white-label order, to keep this cost down (it lets them put more units into this market, and every unit makes them better able to play both time and location arbitrage). Those costs might end up being 1/10 the retail cost, but the expected lifetime value of that cell in Texas is going to be 1,000x the initial outlay. The actual cost is moving the breakeven point on an already aggressive return on capital employed.
It might not even make sense for them to do much in-house manufacturing, though IRA incentives likely push that into the do it now and think about it later bucket. The scooter startups all thought they were going to differentiate on hardware and at the end of the day... none of that mattered. It drew tremendous capital and organizational attention for a thing that wasn't a differentiator in the market or a material concern for consumers.
I also wonder about how much install will really cost. The transfer switch is nearly half of the 2K but a battery is way simpler than a solar install so with time it seems like less than a half day install is possible. You level a site near the meter, place the battery, pull the meter socket, install the socket transfer switch, wire the battery to the transfer switch, reinstall the socket and commission the battery.
Regarding the prices, I think it is important to keep looking forward because batteries and inverters are trending down faster than most of us can conceptualize. There will be bumps in the road but the long term down trend has been consistent for years. I lived through several of these in my years as an EE. HDD, Processing power, bandwidth, Flash Memory, CMOS imagers, ... I remember struggling to afford to include a 4 MByte flash card in the kit for a digital camera. That seems laughable today.
Also Mr. Dell might have some purchasing leverage through his Dad's little computer company.
Agree on the hardware, there will be no moat or differentiation after a few years of the race to the bottom in these components. So long as they can source component deliveries fast enough to support their growth targets doing the manufacturing in-house is probably a mistake.
Ahh, I see the difference between the switch and gateway installation from that link. Gateway, smart panels, etc. are the path to supporting putting some circuits on backup but not the whole panel but you end up on a more expensive install path. If you can black box everything downstream of the meter you cut the costs significantly (mobilization, bonding, and insurance will be the same, but hours will be 1/10 and materials will be much less). The homeowner gets the most from the more intensive install, and any multi-family or community story really begins to reveal this as a play at being the intermediary instead of a end-user focused offering.
That gets back to who gains from this system: the homeowner, the grid, or the intermediary. The intermediary here is trying to capture most of the value. Smart circuit selection could dramatically extend backup or price arbitrage could be passed through to the homeowner (instead of price stability - likely set at markup over average price), but if the homeowner says yes out of fear (price spikes) that leaves the startup to capitalize on the greed (via arbitrage). Skipping the costs from land-lease, insurance, simple maintenance coverage, security, and the like make this a great deal for the intermediary but is just pushes another cost onto the ratepayers for a service their are nominally already paying for. That free land-lease is absolutely cost not counted in their $2,000 install target - the homeowner doesn't own the system and doesn't reap the primary benefits, but takes on obligations and risks and grants an easement for access. None of this needs to be overly burdensome, but you are signing up to become the product here not to use the product.
Who owns the electrons in the batteries? Is it Base Power? Is it the homeowner? Is it shared by a certain percentage? I didn't understand the arrangement between the homeowner and Base Power regarding access to the electricity stored in the batteries. Can't there be a conflict between the two parties?
This left me wondering how much of the transmission problem can be solved by placing storage at both the source and the demand side and maximizing transmission between the two.
Loved this conversation, and it made me wonder what the barriers are to establishing something like this in California. Is it simply impossible, for all intents and purposes, because of how our electrical grid is regulates? Or could some targeted reforms make it possible for regular consumers like me to be part of the solution on this level?
There was some weird ERCOT hate in here. Some things you didn't mention: 1) the average cost of a kWh in Texas is 10% less than the national average at 15.1 c/kWh (residential)
Texas isn't without power more often than other states according to EIAs 2020 analysis. Looking at the graph, it averages 8h/year and Texas can't be above 10h in 2020. But looking at the states that do top the list, this is probably driven by storms, not some sort of larger energy market issue.
What's more in 2022 one in four GWh generated were generated in Texas. Solar is great, but Texas produces almost as much energy from wind as the nation generates from solar in 2022.
I was poking around Base's website and noticed that the upfront cost is now listed as $3,000, not $2,000. Likely due to the increased popularity due to the Volts interview!
I think it might help spread some of the arbitrage benefit to the customer if BASE were to bundle a share in the company with each purchase -- since they're tied together anyway. This would also increase word-of-mouth promotion.
This solution adds an encumbrance to the home, someone else who could file a lien against the new buyer or evade repairs when the system breaks down. This complicates ownership and transfers of ownership on both sides - for the homeowner and when the company sells these 'assets' and liabilities at a later point. Some of the early Solarcity deployments come to mind, which in my mother's case involved a piece of hardware meant to update over the internet that was out of service through about 5 years of support callouts (Ops is going to an existential risk here).
The 20% reserve promise means the homeowner will have 20% capacity when the grid falls over (as arbitrage will be most advantageous right into the collapse), leaving quite a small reserve in the time of need. It'll be smaller if that 20% reserve is established by the service provider at initial install as their permissible 80% draw looks like... leaving the consumer to eat the year over year degradation in capacity.
The arbitrage on ERCOT is going to be extraordinary. There are <10 grid capacity failure events in a year with really crazy prices (last year they paid crypto miners $35M to curtail demand - so these are likely total supply exceeding events), but you can routinely hit a $5k/MWh price difference on either side of a node bottleneck (and even if the grid contains sufficient capacity that capacity won't neatly match the node-for-node distribution path in demand right now). This is why co-located solar and battery storage is less optimal than individually siting those assets - when co-located they'd sit behind the same limited capacity interconnect to node to node grid bottleneck (if one is blocked both are blocked, if one is discharging to fill the interconnect capacity the other is idle) - that system configuration is less robust to current failure modes.
They've got a well crafted solution story here taking advantage of many of the local absurdities of ERCOT. And surprising message discipline. I can see how they got funded and generated interest.
They've found a way to externalize the facilities costs and even get someone else to chip in some of the costs. $2k is extraordinarily low for a hookup like this, you'll pay $6k just for an electrician to pull the cable and configure the circuit these days in Seattle and then the development, battery, and ongoing management costs go over the top. That number is probably here to filter out applicants, not as a material piece of the business (50 discharge/charge cycles on the gen1 battery is a MW, and by arbitrage can net +$4k aka $80 per cycle - if you can play the arbitrage game twice a day and depreciate that asset over 15-30 years you don't need that up front outlay save for early cash flow or as a proof point for PMF - the asset's Lifetime Value is going to be in the $1-2M range).
They've also clearly never deployed to 100,000 PLCs over the wire before. There is manufacturing and then there is manufacturing; Tesla has done a lot of innovative manufacturing but they don't have much history. It is worse at SpaceX, small volume boutique manufacturing. I had a customer with a 125 yr. old machine in the factory; I've worked with manufacturers older than our country. Base Power is still early enough that they can wave that reality away, but every possibility of physical error during updates will occur and several of those conditions will lead to damage to the customer's panel, the battery, the grid, or all three while leaving the central office unable to query that remote for status, recovery, or even to intervene. Many manufacturing companies expect their leaders to do a turn in operations just to internalize the differences between IT and OT. This story is a bit of a classic 'breaking into jail' prologue, consumer retrofits are not going to go smoothly and while the financial alignment is great for the company the ground-reality is going to be a mess with every homeowner able to run their mower into the unit or leave it exposed to hail, etc.
For the consumer it is a bad deal (it may be the only option and better than nothing, but it is still not set up primarily to benefit the home-owner). Even a modest kickback, like $40/month, doesn't come near the yield from one's own participation in peak shifting and discharging back into the grid in periods of high demand (you can use that battery to minimize your own costs, or Base Power can maximize their own yield on those assets. I'd expect that split to go about 80:20 in favor of Bold Power given their reserve model. Texas grid pricing develops crazy short (physical) range deltas.
And to the question about being too popular and driving out one's own arbitrage... if they do 'win' and end up deployed in sufficient scale to ensure smooth functioning of the grid end to end they'll also have the power to induce that arbitrage on demand and hit whatever margin they feel comfortable with achieving. This is an exploitive utility design model - and why this young startup just raised $68M against a $300M valuation for the 2024 version of free UPC readers (Cuecat, circa 2000). Ok, that's too harsh. But the valuation isn't based on making the world a better place, it isn't a coincidence that this is the same market that gave us Enron 25 years ago and a new generation of regulators no longer remember (though apparently ChatGPT was trained on the Enron emails, so they could ask it).
They have a good answer for V2G, because V2G is a natural competitor, but the monetization here sits on the wrong part of the system.
I want this story to work because peak shifting and shaving at the panel is a tremendous opportunity to modernize our civic capacity to deliver base services to our entire population.
Go for it! Prove me, a random person on the internet, wrong! Share the story of a primary company success metric justifying a $30B exit in 4 years (given their $68M raise, VC funding, and $300M valuation pre-revenue? on a team of 11-15) aligned to providing power to people who need it. "People who need it" are notoriously unable to pay as much for it as the individual residential homeowners carrying many of the infrastructure costs supporting this latest go at the free market re-allocating money from rate payers to the venture capital investors without fixing or changing the structural problems in the ERCOT grid and market.
Availability of power shouldn't be left to the free market, we can't say internet access is a national priority and not electricity (especially as AC demand is going to climb everywhere). Exploiting a mistake (ERCOT's whole market design), that punishes your customer, is just a conflicted story top to bottom.
Also- not sure how they think they are going to vertically integrate as they talk about at the end. Seems like they are precluded from doing so-
'The opinion states that big power generators “are now statutorily precluded by the legislature from having any direct relationship with retail customers of electricity.”'
Customers (who already own) gigantic, oversized batteries on wheels (EVs), for little more than the cost of ubiquitous V2G charger installations at large apartments & condos, neighborhood shopping centers, business parks, & various public facilities, could get more stable prices and backup power in the event of blackouts. Meanwhile, the grid could get local distributed storage that helps to stabilize it. If state sanctioned utility transmission monopoly companies & their captured public utility commissions allowed it.
I still believe that the bigger play will be solar parking lot canopies +stationary batteries +V2G chargers at large (sub)urban apartments & condos, neighborhood shopping centers, business parks, & various public facilities, like schools. Micro grids right where most consumers live & work. This can be substantially funded with IRA investment incentives anywhere in the US. No long utility interconnection or NIMBY delays, and no new transmission, land acquisition or other site improvement spending required.
Modular canopy structures will last for 75+ years, with minimal maintenance, & make cleaning & replacing solar panels easy. In my area of CA, all the new medical facilities have already done this (except V2G), and now the schools are all doing it. EV adoption will drive demand at large residential, commercial & business properties. EV owners don't charge when they get home from work; they program their charging at night or when they're plugged in to a charger at work.
On seeing another "clever" startup, I was tempted to holler, "David, one Shayle Kann is enough."
After listening, like the Harvest HP, I want two. Though, as my geotech professor said 40 years ago, "You can make really good money, only one problem, you've got to move to Texas."
Nice way to squeeze storage in NOW, not waiting for V2G, etc. I think when you had Chris Clack on 2-3 years ago he emphasized the advantages of combining distributed storage, and other load control, with cheap utility renewables. Also this rebuts your guest with that whole book about how cheap market prices would destroy renewable generation value. As you all went through, storage value and renewable value can keep feeding back in some great virtuous cycle. Just don't tell the Supreme Court.
One thing, I don't think these guys are the only game in town, though their system and pricing seem really well thought out. I think Octopus Energy offers TX battery owners $40/month if they have some particular batteries and let "The Kraken" control it. Also maybe multiple services in Australia which integrate batteries and other DER control, but probably don't buy the battery for the customer.
As far as the vertical/regulated utilities, I think the ones with lots of VRE would do this; it's partially hyper-cautious PUCs, hounded by "consumer counsels," making it even harder to innovate. I think you had someone from WeaveGrid who said as much. (The PUC allows them to run a fairly primitive program for Xcel which I use to get $10/month for scheduling my car charger, and then letting them "watch" that. Fun with apps, setting that up!)
It's Gexa, Frontier and I think Reliant that have the $40/mo credit for Solaredge system batteries (and maybe something else I'm forgetting).
One unspoken advantage these guys might have is that currently home batteries are expensive to buy but should they be? BNEF says LFP packs hit $139/KWH last year (with further large decreases expected this year). The battery monitoring and management electronics can be done for less than $100. What's the inverter cost? Tesla sells the version of Powerwall3 without an inverter for $1,000 less than the one with an inverter. So the guts (battery packs, BMS and inverter) of a 10KWH system is $2,500. Add a box and fans for thermal management.
Inverters and batteries are both on steep cost reduction curves so I am looking forward to the future.
Can you imagine the distributed world if we had $1/KW solar and $5,000 home batteries (or V2G)?
Is that the US price, or the international price? We have a significant distortion in the US (and India) meant to on-shore the battery supply chains, leading to much higher domestic prices. From the article (here, last November: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/) that's international price, they suggest a cell or pack premium of up to 20% for the US. But we've seen 2/3 of the solar install difference between the US and Aus from tariffs and taxes so... there is probably a step in the value chain here where local costs jump. I still think the electrical install alone is going to be more than the suggested customer outlay.
But the general point stands. You are only paying $20k for a 20kWh battery pack if you are buying retail. Presumably they'll be doing something smarter, even if it is just a bulk white-label order, to keep this cost down (it lets them put more units into this market, and every unit makes them better able to play both time and location arbitrage). Those costs might end up being 1/10 the retail cost, but the expected lifetime value of that cell in Texas is going to be 1,000x the initial outlay. The actual cost is moving the breakeven point on an already aggressive return on capital employed.
It might not even make sense for them to do much in-house manufacturing, though IRA incentives likely push that into the do it now and think about it later bucket. The scooter startups all thought they were going to differentiate on hardware and at the end of the day... none of that mattered. It drew tremendous capital and organizational attention for a thing that wasn't a differentiator in the market or a material concern for consumers.
Thanks for the reply Geoff.
I also wonder about how much install will really cost. The transfer switch is nearly half of the 2K but a battery is way simpler than a solar install so with time it seems like less than a half day install is possible. You level a site near the meter, place the battery, pull the meter socket, install the socket transfer switch, wire the battery to the transfer switch, reinstall the socket and commission the battery.
See the tesla video at this link
https://www.tesla.com/support/energy/powerwall/learn/tesla-backup-switch
Regarding the prices, I think it is important to keep looking forward because batteries and inverters are trending down faster than most of us can conceptualize. There will be bumps in the road but the long term down trend has been consistent for years. I lived through several of these in my years as an EE. HDD, Processing power, bandwidth, Flash Memory, CMOS imagers, ... I remember struggling to afford to include a 4 MByte flash card in the kit for a digital camera. That seems laughable today.
Also Mr. Dell might have some purchasing leverage through his Dad's little computer company.
Agree on the hardware, there will be no moat or differentiation after a few years of the race to the bottom in these components. So long as they can source component deliveries fast enough to support their growth targets doing the manufacturing in-house is probably a mistake.
Ahh, I see the difference between the switch and gateway installation from that link. Gateway, smart panels, etc. are the path to supporting putting some circuits on backup but not the whole panel but you end up on a more expensive install path. If you can black box everything downstream of the meter you cut the costs significantly (mobilization, bonding, and insurance will be the same, but hours will be 1/10 and materials will be much less). The homeowner gets the most from the more intensive install, and any multi-family or community story really begins to reveal this as a play at being the intermediary instead of a end-user focused offering.
That gets back to who gains from this system: the homeowner, the grid, or the intermediary. The intermediary here is trying to capture most of the value. Smart circuit selection could dramatically extend backup or price arbitrage could be passed through to the homeowner (instead of price stability - likely set at markup over average price), but if the homeowner says yes out of fear (price spikes) that leaves the startup to capitalize on the greed (via arbitrage). Skipping the costs from land-lease, insurance, simple maintenance coverage, security, and the like make this a great deal for the intermediary but is just pushes another cost onto the ratepayers for a service their are nominally already paying for. That free land-lease is absolutely cost not counted in their $2,000 install target - the homeowner doesn't own the system and doesn't reap the primary benefits, but takes on obligations and risks and grants an easement for access. None of this needs to be overly burdensome, but you are signing up to become the product here not to use the product.
Who owns the electrons in the batteries? Is it Base Power? Is it the homeowner? Is it shared by a certain percentage? I didn't understand the arrangement between the homeowner and Base Power regarding access to the electricity stored in the batteries. Can't there be a conflict between the two parties?
This left me wondering how much of the transmission problem can be solved by placing storage at both the source and the demand side and maximizing transmission between the two.
Loved this conversation, and it made me wonder what the barriers are to establishing something like this in California. Is it simply impossible, for all intents and purposes, because of how our electrical grid is regulates? Or could some targeted reforms make it possible for regular consumers like me to be part of the solution on this level?
Serious suggestion: reinterview Zach and Justin a couple of weeks post-Beryl to see how their customers fared.
p.s.: We have a son living in Houston and currently experiencing a power outage due to Hurricane Beryl, so this podcast was unbelievably timely
There was some weird ERCOT hate in here. Some things you didn't mention: 1) the average cost of a kWh in Texas is 10% less than the national average at 15.1 c/kWh (residential)
Texas isn't without power more often than other states according to EIAs 2020 analysis. Looking at the graph, it averages 8h/year and Texas can't be above 10h in 2020. But looking at the states that do top the list, this is probably driven by storms, not some sort of larger energy market issue.
What's more in 2022 one in four GWh generated were generated in Texas. Solar is great, but Texas produces almost as much energy from wind as the nation generates from solar in 2022.
sources:
cost per kWh https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
hours without power: https://www.eia.gov/todayinenergy/detail.php?id=50316
Total GWh of wind in the US: https://www.eia.gov/electricity/annual/html/epa_03_01_b.html
Total GWh of wind in Texas: https://en.wikipedia.org/wiki/Wind_power_in_Texas
I was poking around Base's website and noticed that the upfront cost is now listed as $3,000, not $2,000. Likely due to the increased popularity due to the Volts interview!
I think it might help spread some of the arbitrage benefit to the customer if BASE were to bundle a share in the company with each purchase -- since they're tied together anyway. This would also increase word-of-mouth promotion.
This solution adds an encumbrance to the home, someone else who could file a lien against the new buyer or evade repairs when the system breaks down. This complicates ownership and transfers of ownership on both sides - for the homeowner and when the company sells these 'assets' and liabilities at a later point. Some of the early Solarcity deployments come to mind, which in my mother's case involved a piece of hardware meant to update over the internet that was out of service through about 5 years of support callouts (Ops is going to an existential risk here).
The 20% reserve promise means the homeowner will have 20% capacity when the grid falls over (as arbitrage will be most advantageous right into the collapse), leaving quite a small reserve in the time of need. It'll be smaller if that 20% reserve is established by the service provider at initial install as their permissible 80% draw looks like... leaving the consumer to eat the year over year degradation in capacity.
The arbitrage on ERCOT is going to be extraordinary. There are <10 grid capacity failure events in a year with really crazy prices (last year they paid crypto miners $35M to curtail demand - so these are likely total supply exceeding events), but you can routinely hit a $5k/MWh price difference on either side of a node bottleneck (and even if the grid contains sufficient capacity that capacity won't neatly match the node-for-node distribution path in demand right now). This is why co-located solar and battery storage is less optimal than individually siting those assets - when co-located they'd sit behind the same limited capacity interconnect to node to node grid bottleneck (if one is blocked both are blocked, if one is discharging to fill the interconnect capacity the other is idle) - that system configuration is less robust to current failure modes.
They've got a well crafted solution story here taking advantage of many of the local absurdities of ERCOT. And surprising message discipline. I can see how they got funded and generated interest.
They've found a way to externalize the facilities costs and even get someone else to chip in some of the costs. $2k is extraordinarily low for a hookup like this, you'll pay $6k just for an electrician to pull the cable and configure the circuit these days in Seattle and then the development, battery, and ongoing management costs go over the top. That number is probably here to filter out applicants, not as a material piece of the business (50 discharge/charge cycles on the gen1 battery is a MW, and by arbitrage can net +$4k aka $80 per cycle - if you can play the arbitrage game twice a day and depreciate that asset over 15-30 years you don't need that up front outlay save for early cash flow or as a proof point for PMF - the asset's Lifetime Value is going to be in the $1-2M range).
They've also clearly never deployed to 100,000 PLCs over the wire before. There is manufacturing and then there is manufacturing; Tesla has done a lot of innovative manufacturing but they don't have much history. It is worse at SpaceX, small volume boutique manufacturing. I had a customer with a 125 yr. old machine in the factory; I've worked with manufacturers older than our country. Base Power is still early enough that they can wave that reality away, but every possibility of physical error during updates will occur and several of those conditions will lead to damage to the customer's panel, the battery, the grid, or all three while leaving the central office unable to query that remote for status, recovery, or even to intervene. Many manufacturing companies expect their leaders to do a turn in operations just to internalize the differences between IT and OT. This story is a bit of a classic 'breaking into jail' prologue, consumer retrofits are not going to go smoothly and while the financial alignment is great for the company the ground-reality is going to be a mess with every homeowner able to run their mower into the unit or leave it exposed to hail, etc.
For the consumer it is a bad deal (it may be the only option and better than nothing, but it is still not set up primarily to benefit the home-owner). Even a modest kickback, like $40/month, doesn't come near the yield from one's own participation in peak shifting and discharging back into the grid in periods of high demand (you can use that battery to minimize your own costs, or Base Power can maximize their own yield on those assets. I'd expect that split to go about 80:20 in favor of Bold Power given their reserve model. Texas grid pricing develops crazy short (physical) range deltas.
And to the question about being too popular and driving out one's own arbitrage... if they do 'win' and end up deployed in sufficient scale to ensure smooth functioning of the grid end to end they'll also have the power to induce that arbitrage on demand and hit whatever margin they feel comfortable with achieving. This is an exploitive utility design model - and why this young startup just raised $68M against a $300M valuation for the 2024 version of free UPC readers (Cuecat, circa 2000). Ok, that's too harsh. But the valuation isn't based on making the world a better place, it isn't a coincidence that this is the same market that gave us Enron 25 years ago and a new generation of regulators no longer remember (though apparently ChatGPT was trained on the Enron emails, so they could ask it).
They have a good answer for V2G, because V2G is a natural competitor, but the monetization here sits on the wrong part of the system.
I want this story to work because peak shifting and shaving at the panel is a tremendous opportunity to modernize our civic capacity to deliver base services to our entire population.
Go for it! Prove me, a random person on the internet, wrong! Share the story of a primary company success metric justifying a $30B exit in 4 years (given their $68M raise, VC funding, and $300M valuation pre-revenue? on a team of 11-15) aligned to providing power to people who need it. "People who need it" are notoriously unable to pay as much for it as the individual residential homeowners carrying many of the infrastructure costs supporting this latest go at the free market re-allocating money from rate payers to the venture capital investors without fixing or changing the structural problems in the ERCOT grid and market.
Availability of power shouldn't be left to the free market, we can't say internet access is a national priority and not electricity (especially as AC demand is going to climb everywhere). Exploiting a mistake (ERCOT's whole market design), that punishes your customer, is just a conflicted story top to bottom.
Also- not sure how they think they are going to vertically integrate as they talk about at the end. Seems like they are precluded from doing so-
'The opinion states that big power generators “are now statutorily precluded by the legislature from having any direct relationship with retail customers of electricity.”'
https://www.google.com/amp/s/www.tpr.org/environment/2023-12-16/texas-power-plants-have-no-responsibility-to-provide-electricity-in-emergencies-judges-rule%3f_amp=true
What about climate control? Are the batteries placed in shade? Heated in winter?
What happens to the battery if these guys go broke?
I didn't catch this from the podcast, but I would think that Base Power is the owner of that asset, and it would be subject to liquidation.