On a sweltering Tuesday in July, the lights went out in parts of Ohio. PJM, the grid operator that covers 65 million people, scrambled to buy emergency power at $4,000 per megawatt-hour. But in a handful of Columbus suburbs, the lights stayed on. Base Power, a startup backed by Andreessen Horowitz, had been quietly installing Tesla Powerwalls in basements and garages for months. That day, those batteries didn't just keep the AC running — they helped stabilize the grid.
Base Power is doing something the utility industry insists is impossible: making money on residential batteries without subsidies. The model is simple. You let Base install a 13.5 kWh battery in your home for free. In exchange, they control it — drawing power when prices are low, selling it back when they spike. You get backup power if the grid fails, and a small monthly check. Base gets the arbitrage.
The Queue Problem
For any new power plant or battery farm, the first hurdle is PJM's interconnection queue. It's a monstrous backlog — 200 gigawatts of projects waiting for permission to connect, with average wait times north of four years. The queue is so clogged that some projects simply give up. Others pay millions in study fees and never see a watt of power flow.
Base Power's insight: skip the queue entirely. Put the batteries behind the meter, at the customer's house. The grid doesn't need a new substation or transmission line. It just sees a load that sometimes disappears, sometimes injects power. PJM doesn't even know the batteries exist as a single asset — they aggregate into a virtual power plant that can respond in milliseconds.
“We don't need permission to connect. The customer's panel is already connected. We're just making it smarter.” — Base Power CTO, in a private investor call.
The Economics of Cheap Lithium
Base Power's timing is no accident. Lithium carbonate prices have collapsed 80% since 2022. A megawatt-hour of battery storage now costs roughly $130 per kilowatt-hour at the pack level, down from nearly $300 five years ago. At those prices, the arbitrage math works: buy power at 3 cents per kWh overnight, sell at 15 cents during peak hours, capture the spread. Over a 10-year battery life, that's a 15-20% IRR before accounting for backup service fees.
But the real money isn't in the spread — it's in capacity payments. PJM's capacity market pays resources for being available during emergencies. Base Power's aggregated batteries qualify as a capacity resource. Last year, PJM paid $28 per kilowatt-month for capacity. A single 13.5 kWh battery can earn roughly $15 per month just for existing. Multiply that by 10,000 homes, and you're looking at $1.8 million a year in near-passive revenue.
The Catch: Trust and Control
Here's the part most people bristle at: Base Power can drain your battery whenever they want. They promise a minimum of 2 hours of backup protection, but during a price spike, they'll sell every kilowatt-hour they can. If the grid goes down during that spike, you're sitting in the dark.
Base Power's answer: algorithm. They claim their forecasts are accurate enough to keep 95% of batteries at 80% state of charge during high-risk periods. But in Texas during Winter Storm Uri, many similar algorithms failed. The grid went down faster than models predicted, and batteries were drained to zero when they were needed most.
Base Power says they've stress-tested with historical data. But trust is a fragile thing. One bad outage, and the whole model collapses.
The A16z Bet
Andreessen Horowitz has poured $35 million into Base Power — a tiny sum by VC standards, but a bet that the energy grid is ripe for software disruption. The thesis: utilities are slow, regulators are slower, and the grid is desperate for flexibility. Base Power inserts that flexibility at the edge, without asking permission.
But a16z is also betting on the carbon angle. When a gas plant ramps up to meet peak demand, it emits CO2 at the margin. Batteries that shift load from off-peak renewables to peak hours effectively displace those peakers. Base Power estimates each battery avoids 2.3 tons of CO2 per year. At 10,000 homes, that's 23,000 tons — roughly the annual emissions of 5,000 cars.
Will It Scale?
The biggest risk: battery degradation. Base Power cycles each battery aggressively — sometimes multiple times per day. Tesla Powerwalls are rated for 7,000 cycles, but real-world performance depends on temperature, depth of discharge, and frequency. If batteries degrade faster than expected, the IRR drops, and Base Power is left with a fleet of bricks.
Then there's the regulatory risk. PJM is watching. If Base Power grows too large, regulators may classify them as a utility and impose new rules. Grid operators hate black boxes. They want visibility into assets that can trip the system. Base Power's aggregation is opaque — PJM sees a single virtual resource, not thousands of individual batteries. That opacity could become a liability.
Still, Base Power is signing up 300 homes a month in Ohio, and expanding to Maryland and Virginia. They're targeting 100,000 homes by 2028. If they hit that number, they'll control 1.35 GWh of storage — roughly equivalent to a large gas peaker plant, without the queue, without the transmission lines, and without the emissions.
That's the kind of disruption that keeps utility executives up at night. And it's exactly why a16z wrote the check.
