Home batteries are suddenly cheap and everywhere. Here’s why.

Competition is heating up in the race to install home battery systems, with heavy hitters and nimble startups all vying for a piece of the market.

Tesla may have led the pack for years, but recently it has been feeling the heat from upstarts like Base Power , which has raised $2 billion in less than a year . The automaker-cum-energy company recently introduced a new Powerwall battery leasing plan that cuts the monthly price by more than two-thirds, an apparent response to all that competition.

Just how steep is that price cut? Home batteries typically cost more than $10,000 installed, making them attractive only to people with deep pockets who already have solar panels generating more power than they can use. But now, homeowners in Texas can lease either 27 kilowatt-hours of worth of Tesla Powerwalls for $35 per month or 39.2 kilowatt-hours of Base Power batteries for $19.

That kind of pricing is only possible because of two things: declining battery costs, and a technology known as the virtual power plant (VPP). A VPP aggregates and coordinates distributed energy resources like batteries and, in some cases, water heaters so that thousands of individual devices behave on the grid like a single large power plant, one that a utility can call on when it needs extra electricity. Companies like Tesla and Base Power, for example, can use their battery fleets as a VPP to help utilities and grid operators fill in gaps during periods of high demand.

The market for this technology is still small — $7.4 billion today — but it’s expected to top $30 billion by 2033, according to Grandview Research.

Traditionally, to handle spikes in demand, utilities have had two options: build expensive, specialized power plants known as “peaker plants,” which only run during periods of high demand, or pay large energy users, like factories, to disconnect for a few hours. Now, they can pay a VPP instead.

VPP operators charge the batteries when electricity rates are low, then sell that stored power back to the grid at a profit when demand sends prices soaring. The operator pockets a chunk of those profits, passing some on to consumers in the form of low electricity prices, cheap backup batteries, or both.

“There are resiliency needs everywhere,” Tim Pianta, head of utility partnerships at Base Power, told TechCrunch. “Our goal is to have it be a win-win, like it’s a no brainer.”

As electricity demand rises on the back of AI data centers and the electrification of the economy, utilities and grid operators are embracing VPPs with newfound fervor.