Residential battery startup Base Power quietly expanded into PJM this month via a retail electricity license in the Commonwealth Edison territory of Illinois.
The company, founded in 2023, takes a fully vertically integrated approach to residential energy storage and grid services, manufacturing, installing, owning, and operating residential batteries. It’s an approach that CEO Zach Dell — son of Dell Technologies CEO and founder Michael Dell — says beats utility-scale batteries on capex, and could help data centers avoid the community opposition that often plagues large-scale infrastructure buildouts.
Texas, where the company is headquartered, was a natural starting point, both because ERCOT is an unregulated energy-only market, and residential customers don’t cover grid-usage charges, making the math easier. In most parts of Texas, Base acts as a retail electricity provider, charging households fixed electricity rates that Base keeps below market averages by oversizing their batteries and selling back into ERCOT’s ancillary services market. (In the parts of Texas operating regulated markets, Base has begun selling its capacity directly to utilities in need of fast megawatts.)
In other words, Base’s Texas economics are built almost entirely on managing volatile wholesale energy prices, not on demand-based capacity or transmission charges.
In PJM, retail electricity providers are exposed to a very different cost stack than in Texas, explained Travis Kavulla, who leads policy and market strategy at Base. For one thing, retailers in the region shoulder demand-based capacity and transmission charges, which changes the underlying economics of the Base business model. Instead of making its money on energy arbitrage like in Texas, Base’s Illinois model is centered on using batteries to shave peaks and cut capacity and transmission system charges.
What’s unique about Illinois is that retailers can net demand-related capacity and transmission charges across their customer portfolio. In most states, the grid charges suppliers based on peak usage of each individual customer — but in Illinois, if one Base customer’s battery is exporting to the grid during peak hours, that “negative demand” is used to offset peak usage from other Base customers.
This dynamic essentially creates a “private capacity market” on the demand side within the customer base, Kavulla said. Base can save a massive amount of money on grid fees, and share those savings with customers who are siting the batteries at their homes without having to engage with PJM’s complex supply-side aggregation rules at all.
Forging ahead of market reforms
The setup in Illinois also allows Base to shed the risk that FERC Order 2222 — a federal mandate aimed at letting small batteries join energy markets — never comes to fruition, Kavulla explained. In PJM, for example, implementation of the order has been slowed by technical and bureaucratic hurdles, while Illinois’ state-level retail rules are active today.
“I would take the entry into Illinois as a bit of a beacon to other states in PJM that there are other ways to do this than waiting to have PJM solve your problems for you,” he said. States are the exclusive regulators of retail electricity markets, he added, but waiting on the market operator has been an “unfortunate consistent theme of state regulation.”
In Illinois, Kavulla said, “we’ve found a workable, retail-focused business model that can basically act as a tradable market and demand flexibility on the retail side, which is equivalent to adding the supply resources in the wholesale market, but is much easier to do.”
That said, while Illinois has a favorable state-level regulatory climate, Base faces other challenges there in the form of a fragmented local permitting landscape. The company is navigating a patchwork of building codes that vary wildly from town to town, Kavulla said, which is a level of friction that makes rapid scaling difficult.
In an effort to ameliorate that, Base is advocating for standardization across the state, like in Texas, to require municipalities to all follow a single up-to-date version of the National Electric Code for DER installations.
Base eyes ‘BYOC’ for data centers
Data centers are also a significant part of Base Power’s roadmap, Kavulla said, and the company’s commercial team is already working on a handful of “bring your own capacity” partnerships that haven’t yet been publicly announced. That framework, popularized by demand response provider Voltus, involves large power users lining up contracted capacity or demand flexibility (largely through out-of-market-financing) in order to get online faster than waiting on infrastructure buildouts. That said, it’s a complicated ask.
“It’s a little bit weird that we’re asking a group of customers with some of the highest values of lost load, people who are so fearful of interruption that they have historically been willing to spend tons of money on backup generation…to curtail their operations,” Kavulla said. “We should be asking them for sure to bring their own capacity or to bring their own demand flexibility, and at a minimum, to pay other people or generators to produce more or to use less during the relevant periods of time.”
That squares nicely with the Base approach of setting up what is essentially a “bilateral market on the retail side.” Because PJM’s capacity market is traded zonally, reducing demand at a home is functionally equivalent to adding supply on the wholesale side at a nearby data center , he added.
It could also be a boon for developers struggling to get local communities on board with their buildout goals, Kavulla said. Data centers could win some “social license” to build and operate by sourcing their demand flexibility from a consumer technology — home batteries — that provides “tangible spillover benefits to ordinary customers,” in the form of backup generation and lower retail rates.
