Credit: Base Power

Base Power Will Install A Residential Storage Battery For $2,000. What’s The Catch?

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Base Power is a Texas startup with a simple mission — leverage the chaos of the Texas utility grid to make money. Every problem is a profit opportunity for someone. Texas has the most unreliable energy grid in the nation, which is what created the opening for Base Power. How did things get this way? The answer is simple. “You get what you pay for,” as my old Irish grandmother liked to say.

Texas has an energy grid that is purposely designed to find the cheapest way out in any scenario. It prides itself on being independent, with few interconnections to the energy grids in surrounding states. That way, it can thumb its nose at the federal government and be shielded from nabobs like the Federal Energy Regulatory Commission (FERC), which likes to tell states what to do. Texas doesn’t need any of that federal folderol, no sirree, Bob!

The downside of doing everything on the cheap is a high failure rate. CleanTechnica readers will recall when winter storms caused a wave of power outages all across Texas in February of 2021. Greg Abbott, the people’s choice to led them to the promised land, blamed the outages on renewable energy, and he was partly correct. Texas has some strong prevailing winds, which has made it a mecca for wind farms. Wind turbines can operate in cold conditions. In fact, they are the preferred choice for powering research stations in Antarctica, but they have to be weatherproofed first, and that costs money.

Since the whole Texas grid is based on the principle of paying as little as possible, the steps needed to keep those wind turbines operating in the cold was omitted. Bazanga! It got cold, those shiny new wind turbines stopped working, and the governor got to blame renewables. He forgot to mention the cold also froze many of the pipeline pumps that keep the methane gas flowing to Texas’ many thermal generating stations. Those gas-fired plants couldn’t be powered up because they had no fuel for their boilers. Isn’t politics fun? You get to lie to people all day every day and suffer no consequences. Whee!

Now here’s an economics question: What happens when people want a lot of something but there isn’t enough of it to go around? Exactly! Prices go up. In fact, in February 2021, the price of electricity spiked all the way up to $9,000 per MWh according to the Texas Tribune. Normally, it is between $40 and $60 per MWh. Homeowners who normally paid a few hundred dollars a month for electricity suddenly found themselves being billed $1000 or more. That’s the sort of sticker shock that gets people’s attention. Texans have also seen their utility bills double in the last few years while varying wildly month to month, making it hard to balance their budgets.

 Introducing Base Power

Two people who noticed were Zach Dell, son of computer pioneer Michael Dell, and Justin Lopas. Together, they formed Base Power, a company that sells and installs residential storage batteries at a super low price — $2,000 in most cases. Is there a catch? Of course there’s a catch. Dell’s background is in private equity at Blackstone and as a venture capitalist at Thrive. Lopas is the former head of manufacturing at defense startup Anduril Industries, which also counts Thrive as an investor. The pair has raised $68 million from investors including Thrive Capital, Valor Equity Partners, and Trust Ventures.

Base Power is willing to sell batteries so cheaply because of its complicated business model, says Bloomberg. Its goal is to create a vast network of batteries that it can tap into constantly, then use software to monitor the minute-by-minute fluctuations in energy prices so it can fill up the batteries when energy is cheap and draw from them when energy is more expensive. Base Power expects to make money on these price gyrations and pass along some of the savings to consumers. Homeowners who sign up with Base Power will get one big advantage — a guaranteed fixed monthly utility bill that is lower than what they were paying before. It’s similar to a power purchase agreement in which an energy provider agrees to supply electricity at a fixed price over the life of the contract.

“Our ageing energy systems are not fit to harness our increasingly renewable and intermittent power supply, and we are unprepared for growing demand from Texas’s growth and the electrification of our economy. Base Power is the key to unlocking an energy abundant future through dispatchable, distributed battery storage,” Zach Dell told Energy Central recently.

Base Power is a licensed electricity provider in Texas and will operate as a virtual power plant. When the grid is up and running, the battery will improve grid stability, and when the grid goes down, it will protect customers’ homes from power outages. By switching to Base and installing a Base battery, customers will gain access to reliable battery backup and competitive energy rates, without the high upfront costs of traditional home batteries or needing to install solar.

“It is very exciting to see companies like Base Power bring Texans an affordable alternative to backup generators, while adding dispatchability to the grid and compensating residential customers fairly for their ongoing reliability contributions,” said Becky Klein, former chair of the Public Utility Commission of Texas. “This is a step in the right direction for the Texas power grid and consumers.”

The model Base Power is using is designed to bring grid assets online faster and more cost effectively than existing solutions. It offers transparent monthly billing with no hidden fees and no misleading rebate programs. The batteries are designed to last 15 years and withstand extreme temperatures and weather, and Base Power owns the battery and handles any maintenance on the system.

Base Power Creates A Virtual Power Plant

The shift toward alternatives such as wind and solar will likely exacerbate problems nationwide, because they depend on specific conditions (namely wind and sunshine) to work, Dell and Lopas argue. They say this makes the grid less reliable and opens new markets for the company. Creating a network of batteries could provide a stabilizing force for grids across the country. “The big thing we’re looking to do is put a lot of batteries on the grid where they’re needed most,” Lopas says. “Texas makes and consumes more energy than any other state in the US, but this is just a place to start.”

Base Power is currently buying much of its battery technology and the energy it delivers from suppliers while working on its own battery storage system that can be installed more quickly. In the years ahead, Base Power also plans to build its own wind and solar farms to supply power. So far, the company has installed its systems at a small number of houses and says it has a few hundred people on its waiting list. An operation like this requires a large sales force and a group of experienced electrical contractors to handle the installations. In that respect, it is much like rooftop solar companies, many of whom have found the cost of acquiring customers to be unsustainably high.

Over the past year, Dell and Lopas have been cold pitching customers at their homes. “Going door-to-door is humbling, and, well, in Texas it’s a little scary,” Dell jokes. For someone who has breathed the rarefied air of the private equity world most of his life, that must be quite an experience. Base Power has recruited a number of prominent employees from Anduril, SpaceX, and Tesla. Among them are coders who are writing the software to manage complex energy swaps while also presenting customers with a simple, modern way to monitor their electricity use and pay bills. The company’s investors value the business at $300 million, according to people familiar with the financing terms who asked not to be identified because the information is private.

Base Power offers transparent monthly billing with no hidden fees and no misleading rebate programs. Base batteries are designed to last 15 years and withstand extreme temperatures and weather. Base Power owns the batteries and handles any maintenance required. For more information, please see the FAQ section of the company’s website.

The Takeaway

Base Power is the latest example of what used to be known as arbitrage. Reduced to its simplest terms, it means buying low and selling high. It seems to make money by leveraging the nascent distributed energy resources model. Its founders have a wealth of experience in the world of private finance, but one wonders if they quite understand the utility industry. The companies that supply most of the electricity in America are investor-owned, for-profit corporations. As one reader commented recently, they like to send electricity “downhill” from a central distribution point to their customers. They are less than thrilled when their customers want to send it back to them, especially if they are using company wires and transformers to do so.

As a group, CleanTechnica readers welcome a brave new world of virtual power plants based on a distributed energy resources (DER) model, but California has recently changed its regulatory rules to make VPPs and DER much less financially rewarding for individual customers. The utility industry has many friends in high places — largely because they take some of that money their customers pay to buy compliant politicians lobby lawmakers and regulators to make policies that allow them to make more money.

One wonders if the long knives may be out for Base Power at some point in the future if they transition from a startup with a few hundred customers to a mature company with tens of thousands or even millions of customers. A person can steal more money with a briefcase than a gun, my old Irish grandfather often said. The road ahead for Base Power is strewn with boulders and potholes. It will need to be agile to avoid them all.

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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