Our Investment in Base Power
Building the modern power company through distributed battery storage
In February of 2021, severe winter storms swept across Texas putting it in a deep freeze and resulting in one of the worst energy infrastructure crises in the Lone Star State’s history. More than 4.5 million homes, approximately a quarter of all residences, were without power for several days. While there are many reasons why Texas’ energy infrastructure suffered near collapse, they largely all point to a system that is undergoing greater strain in the face of climate change and the electrification of the economy. Intense heat waves, prompting peak air conditioner use, make blackout warnings from the state’s sole energy operator, ERCOT, increasingly frequent.
In addition to extreme weather, the confluence of greater solar and wind energy and electrification of homes and buildings highlights the need for more battery storage to make the energy grid more resilient in light of these pressures. However, simply building out grid-scale storage presents numerous challenges. Utilities face steep capital expenditures to build and deploy batteries and transmission lines. The sometimes vast distances those lines have to traverse are costly and result in electricity “loss” through dissipation. They also present multiple points of failure should their connection to the grid be severed. Moreover, deployment of this infrastructure is often hampered by slow permitting.
Base Power, located in Austin, Texas, is solving the problem of providing consumers with reliable and affordable energy by building the largest distributed battery storage network. The company deploys batteries to homes, which serve as a seamless source of backup electricity during outages. Base Power provides homeowners with a free battery, which normally can cost tens of thousands of dollars, and the homeowner simply pays a one-time installation fee. Complementing its battery, Base Power also provides its customers with affordable electricity, serving as a retail energy provider (REP). MCJ is excited to announce its investment in Base Power and back its co-founders, Zach Dell and Justin Lopas, whose vision for deploying storage across the nation comes at a critical time in America’s energy transition.
What is Base Power?
Base Power is deploying and operating battery storage at homes and eventually businesses while also providing customers with reliable and affordable electricity. Focusing on Texas as its first market, the company offers homeowners a large battery for free with a $2,000 installation fee. With home batteries ranging between $10,000 to $15,000, depending on whether it’s added to rooftop solar, energy storage is cost-prohibitive for many homeowners. Base Power removes that price barrier to adoption by reducing much of the upfront cost. It’s able to do this by pairing its battery with retail energy which it monetizes by charging customers the cost of providing them with energy; in addition, it generates revenue from selling electricity back to the grid during peak demand and price volatility. As the customer-facing provider of electricity, Base Power is positioned to become a trusted energy brand for households and businesses, and it intends to deliver a seamless digital experience for all its customers’ energy needs. On the back end, Base Power is striving to build, own, and operate the largest distributed battery farm — one that makes the grid more resilient, scalable, and cost-effective.
Why Did We Invest?
MCJ easily found many reasons to get excited about Base Power.
Compelling Founder-Market Fit
One of the leading reasons underlying MCJ’s investment is Zach and Justin. The two founders represent a complementary pairing of operators with each having an impressive background in his own right. Together, we feel they constitute a strong founder-market fit with the opportunity Base Power is pursuing and believe they can scale the company quickly.
Zach has gained formative experience in private equity at Blackstone and venture capital at Thrive. Thrive, one of his early investors, is credited by Zach for providing him with insight into the battery space. When we first met him, he spoke passionately about how deals he worked on in the battery supply chain galvanized his belief that energy storage would be key as the U.S. expanded its adoption of renewables and that the time to work in this area is now.
A mechanical engineer by training, Justin has spent his early career as a manufacturing engineer at SpaceX, rising to lead engineer of the company’s Starship manufacturing. In this role, he led an over 70-person cross-functional fabrication, integration, and engineering team across multiple sites and he was responsible for process and tooling design as well as physical build and integration of Starship-family vehicles. Justin went on to serve as Head of Manufacturing at Anduril, where he led an over 150-person team tasked with designing and building next generation systems for defense of the U.S. and its allies.
What Zach and Justin have accomplished at Base Power in 10 mere months — in the way of assembling talent and backing as well as launch readiness — is nothing short of impressive. For this reason, we have a very strong conviction that they are capable of building a generational business and brand in the energy space.
Need and Momentum for Battery Storage
Before 2020, large-scale batteries barely existed in places like Texas. Recently, it has been reported that battery storage constitutes nearly 60% of projects in the state seeking connection to the grid. In the summer of 2023, Texas had approximately 4,000 megawatts of batteries, which is expected to grow each of the next two summers to reach 12,000 to 14,000 megawatts. As the state that generates and consumes the most electricity, including from renewables, Texas represents ground zero for the deployment of energy storage, and states like California, Massachusetts, and New York are following suit.
Additional momentum propelling storage is coming from both the public and private sectors. For the first time, tax credits from the IRA have incentivized stand-alone battery deployment. As a result, developers are aggressively deploying batteries as private equity invests heavily in new storage technologies and companies. According to PitchBook, venture capital firms invested $4.9 billion in rechargeable battery companies in 2021, up from $1.6 billion in 2020. All the while, battery costs have declined since 2015 as the technology has improved.
Vision and Solution
We believe Base Power offers an elegant solution that not only delivers value to homes and businesses but also to the grid as a whole. For its customers, Base Power provides energy backup when needed and electricity when it’s most affordable. By purchasing renewable energy from the wholesale market and by intelligently optimizing for when electricity is cheapest, the company economically provides energy to its customers. The company believes “your home or office should run on 4am power, not 6pm power.”
In addition, Base Power is solving many of the aforementioned challenges associated with grid-scale storage. Its decentralized strategy takes advantage of existing grid interconnections at homes and businesses, and its business model allows for more economic installations of batteries. Most importantly, by distributing storage across customers, Base Power creates greater resilience in the event of outages at power generation sites.
As America’s economy becomes ever more dependent on a 24/7 electricity grid, solutions like Base Power will become critical to ensuring the energy transition is smooth and seamless.
Additional Resources
Bloomberg: “A New Kind of Power Company Will Put a Battery in Every Home”
Follow Base Power, Zach, and Justin on X.
Hiring for various roles in Austin, Texas – see Base Power’s careers page
Why write an article in 2024 and show decline rates of battery until 2019? That is very fishy.