Tesla is launching a new residential backup power offering in Texas, combining its Powerwall home battery with a retail electricity plan through Tesla Electric.
This is the first time Tesla is bundling a Powerwall lease with its retail electricity offering, which means a customer can get both a discounted rate on a home battery, and a lower fixed monthly electricity charge, all via Tesla itself. It’s a move that brings Tesla closer in line with the strategy taken by fellow vertically integrated home battery maker Base Power — and is indicative of the expanding value of flexible capacity, particularly in load growth hotspots like Texas.
Base, founded in 2023, designs and manufactures its own batteries, then installs and operates them, maintaining ownership while acting as a retail electricity provider for its companies. The company, whose latest valuation puts it at around $13 billion, then aggregates those batteries, charging them when wholesale power prices are low and selling into the market when demand spikes. Affordability is one of the company’s top differentiators, CEO and co-founder Zach Dell told Latitude Media in a recent interview: “The home backup market outside of Base really remains a premium product offering,” he explained.
But Tesla’s own version of the Base model signals a shift in the home energy market.
Under Tesla’s existing offerings, customers can lease a Powerwall via an arrangement in which Tesla owns, monitors, services, and maintains the system. Separately, eligible customers in Texas’ competitive retail areas can choose Tesla Electric as their electricity provider. Powerwall owners who enroll in a Tesla Electric plan are automatically enrolled in Tesla’s virtual power plant, and can get credit on their electricity bills.
Tesla is presenting its new, bundled offering as an affordability pitch. It’s designed to lower the barrier to entry for residential backup power in Texas, the company said. The plan includes installation of two Powerwall units (totaling 27 kilowatt-hours) for $35 a month — a price that reflects a $122 per month lease on the batteries, minus an $87 VPP credit. That’s 74% lower than the standard list price of Powerwall, spread over a 12-year lease, Tesla said.
The promise of a new model
Tesla’s energy storage business has been gaining momentum for the last several years, driven largely by the Megapack, its industrial-scale offering.
In 2025, Tesla deployed 46.7 gigawatt-hours of storage, doubling its deployments in 2024. At the same time, on Tesla’s fourth quarter earnings call earlier this year, CFO Vaibhav Taneja pointed to “increased low-cost competition” as one of several factors likely to “compress” Tesla’s margins on energy storage products moving forward.
Base Power, one residential competitor, recently released a new generation of its battery, expanding it to 40 kWh. That expansion is key to the Base model — oversizing the battery compared to a home’s needs in order to have extra capacity to dispatch into the market.
Tesla’s new Base-like offering in Texas isn’t entirely new for the company, which has a similar program in Massachusetts: Tesla combines a discounted Powerwall lease with automatic VPP participation. That framework, Tesla’s VPP and retail electricity lead Kevin Joyce told Latitude Media in April, “shows the maturation of the VPP business.”
Like in Texas, the idea behind the program is to expand affordability and access, making it “just that much easier” for homeowners to participate in VPPs, he added. The key distinction between the setup in Massachusetts and the new offering in Texas is that households signing a lease keep their existing retail provider, such as National Grid or Eversource.
Leveraging existing distributed capacity is a “starting point” for Tesla, which has already installed more than a million Powerwalls worldwide, Joyce said. As of last spring, only around a quarter of those batteries were currently enrolled in VPPs.
But that existing installation base isn’t “indicative of what’s possible in the future,” he added. “Adoption is still accelerating. When it comes to DERs generally, and as a solution to the affordability problems that we’re facing everywhere across the country.”
The promise of the Massachusetts VPP program — and of the new Texas bundle — is to “accelerate deployment of DERs quickly and deploy new capacity in order to meet some of the needs that are out there,” Joyce said.
