Lunar Energy said today that it raised $230 million to fund an expansion of its home battery systems and virtual power plant software.
The cash comes from an oversubscribed Series D round of $102 million, let by B Capital and Prelude Ventures, as well as a previously unannounced $130 million Series C led by Activate Capital. (Editor’s note: Prelude Ventures is also an investor in Latitude Media.) The new cash means the company has raised about $530 million since its founding in 2020 by Kunal Girotra, a former head of Tesla Energy.
Girotra told Latitude Media that the company plans to quadruple its home battery manufacturing capacity in the coming years as it expands its customer base from California into other states including Illinois, Nevada, Texas, and Utah. Right now, Lunar Energy makes enough battery systems a year for about 10,000 homes and manages about 650 megawatts of distributed devices.
The company is also scaling up its software business with utilities and other energy retailers looking to deploy VPPs.
“As energy costs rise, a lot of focus has been on building big power plants,” Girotra said. “They are not the only solution. The best way to provide consumers with low-cost, affordable energy is to deploy behind-the-meter home battery systems, and control all of them into a distributed power plant and exchange that energy with the grid.”
While they aren’t yet in wide use, certain early adopter utilities, most notably PG&E, are testing VPP programs that use software to aggregate home batteries and other devices and shift loads when the grid is stressed, such as during heat waves. The goal is to save money by avoiding building costly new power plants and transmission and distribution infrastructure, which ratepayers would be on the hook for — something regulators especially want to avoid in a moment when rising utility bills have become a political flashpoint.
The market opportunity is massive, Girotra said, noting that in the U.S. alone, less than 1 million of the 75 million homes have battery storage. Lunar is part of a growing group of companies developing distributed batteries to operate as utility assets in either a residential or commercial context — momentum that investors are bolstering with large raises.
One notable example is the two-year-old company Base Power in Texas, which is leasing and installing residential backup batteries at a discount to competing systems, then selling the power to customers — similar to a retail electricity provider. The company shocked the market in October by announcing $1 billion in funding, which will help finance construction of its own battery factories.
The VPP partnership model
Key to Lunar Energy’s growth in VPPs so far has been its partnership with Sunrun. The residential solar company has an ownership stake in Lunar Energy and uses its software — known as Gridshare — to manage VPPs across a dozen markets, including California.
Last summer, Gridshare aggregated a portion of Sunrun’s 500-megawatt fleet of home batteries that participated in California’s Demand Side Grid Support program, or DSGS. (Funding for DSGS has since been vetoed by Gov. Gavin Newsom, so it won’t be continuing.)
“That 500 megawatts is a medium-sized power plant,” Girotra said. “The grid operator did not have to build new plants. They literally had to just connect these homes and get energy back into the grid. So this back-and-forth smart grid is not the future, it is the present.”
Girotra added that Gridshare is tech-agnostic, so it can manage devices that aren’t made by Lunar Energy.
The company’s competitors include Tesla Energy — which also participated in a major DSGS pilot with Sunrun last summer — and Octopus Energy. The latter this week announced a deal with VPP provider Voltus; as a part of that partnership, Octopus will aggregate home energy devices to free up power in key data center markets, including PJM and California.
Girotra said what sets Lunar Energy apart is that it both makes its own batteries, and its software Gridshare can talk to devices that aren’t its own.
“What is unique is we’re the only company that makes our own hardware and has a software that also works with other people’s hardware,” Girotra said. “There are standalone software companies, stand alone hardware companies, but none that exist that do this combination of building great hardware at the same time having a software platform that’s agnostic.”
Girotra added that Lunar Energy only contracts with battery manufacturers in the U.S., so the company is eligible for the investment tax credit and a domestic content bonus included in the Inflation Reduction Act and maintained by the GOP’s One Big Beautiful Bill.
