E135: The Battery That Pays You Back with Lunar Energy

Plus battery combination that can power your house, save you money, and then when you connect it to all of your neighbors' systems, actually function as a pretty good-sized power plant that generates energy that you can get paid for.

We have talked about this idea of virtual power plants on the show before, although my guest this week argues there is nothing virtual about VPPs. And the vision of what a whole bunch of connected batteries can give back to the grid is starting to come into serious problems.

to become a distributed power plant or in some cases called a virtual power plant.

Um, but you you really had a front row seat to this kind of evolution from kind of dumb solar to dumb batteries to smarter solar to smarter batteries. You know, what did you see that made you think this is the company I want to build?

y even though Tesla innovated in in some aspects of the of the battery and they still continue to do so, the market was still very fragmented in terms of how these things got into people's homes. What I mean by that is um There were companies making just a battery, there was somebody else making a smart panel, a third company making an inverter. Fourth company making a charger.

and there was lack of an ecosystem play, which is what Lunar's about. We're not a widget company. We're a we're a solution company, meaning we provide a homeowner the entire power plant in one go with one app. And so they don't have to think through uh if different systems work with each other or not. So it's like a very neatly designed Apple like fully integrated ecosystem.

uh which helps customers reduce complexity in their lives when it comes to energy. It also helps the installers who get these products in people's homes. to get the lowest cost of installation, which in the end helps the consumer. So that was the reason we wanted to start I wanted to start my own company is because I didn't see anyone else having that vision for the complete ecosystem for the home. Not to mention the if you want all these homes to operate with the grid.

You can't have a wall garden of software like most other companies have who build their own hardware. So the strategy of Lunar has always been build an ecosystem of neatly designed Uh uh brilliantly designed, intelligently controlled. pair them with an open ecosystem software enterprise product, which is the Android approach for connecting devices. Uh I think that combined vision is what led me to say, Well nobody else is doing that. Let's just do it on our own.

Then the lunar system comes with a uh a few different components, which as a consumer you don't need to worry about because the installer takes care of that. But the components are threefold. One is the Small little boxes called maximizers. They go below each of the solar panel on the roof. Um the reason they're called maximizers is as the name suggests, they maximize energy coming out of the solar panel.

Unlike string inverters, maximizers are DCDC converters that go behind a solar panel and give you two to ten percent more energy than you get from a traditional string inverter. So that's one benefit that you get is solar maximization. The second component that goes on a consumer's home is the lunar system, which is comprised of modular battery blocks.

Uh now why that's why is that important? Because these modular battery blocks are five kilowatt hour each in capacity. They stack together like Lego blocks on a wall. It's very easy to install for an installer. It takes minimal space for a consumer, which matters because. Spaces inside garages as well as uh outside homes is quite limited and our product stacks vertically as opposed to other products which are pretty big, bulky, and they take a lot of lateral wall space.

So the vertical stacking mostly impacts the installer, but also helps the consumer get less use less wall space. On top of that vertical stack of batteries sits a neatly integrated inverter which takes the solar and the battery DC, combines it, and then converts the DC to AC, which is the way you connect any power into the home. And then the last component is along with the lunar system on the wall, there's another box called the lunar bridge.

which is the bridge it's called th the bridge because it's the bridge between the utility and the home. And it isolates the utility from the home when the home loses power. And it creates a microgrid when the home loses power. And then solar and lunar can run your home indefinitely with all the smarts that are. So while these may sound multiple components, they all come together as one system. And for the consumer, they can see all this in their very engaging consumer app.

Which has the lunar AI intelligence. inside the system, running 24-7. It's looking at your consumption patterns. It's looking at your weather data on how solar is going to get produced. it knows your energy t uh u utility tariff as well from P G and E or any other utility, and then it continuously decides every single Few few seconds. Should I charge? Should I discharge? Should I pull power from the grid or should I pull power from solar or the battery?

So that intelligence comes innate and native to every lunar system. And that's what the consumer interacts with.

Um so if any homeowner has a lunar system at their home in California, either in Northern or Southern California, they will be saving at least, I would say, you know, five hundred to a thousand dollars a year uh on uh actually You know, two thousand dollars a year total, but five hundred dollars more extra because of lunar AI, which is our um AI optimization algorithm that actually optimizes the home.

Uh I would say it pays back in five to seven years the cost of the system. Having said that, most consumers today don't even need to shell upfront cash for this. You can lease systems and the leasing companies who lease you systems Provide you a zero cash down offer and you can get a lunar system for as low as two hundred or two fifty dollars a month, and that m that amount is going to be Definitely less than what you paid the utility. In some cases even$150,$200 less per month.

So it's like a no-brainer offer where you're not putting any money down, a company comes and puts the lunar system in your home, uh and the lunar app Does its intelligent thing and you're already paying a fixed cost to the utility bill. And the lunar AI algorithm makes sure that you never ever definitely pay your utility bill as you you always have the lowest cost.

two, three kilowatt solar and they want more solar and lunar. You can do that too. Our software adapts to any such use cases in homes and that's what we've been striving that. Every home, regardless of their situation, should be able to get a lunar system, is how we've designed it for. So it works on those use cases.

The one thing we didn't cover is that for all those use cases, of course, saving money is the uh l lowest cost of energy is our promise to the market. In addition, you also get twenty-four seven power.

in case the grid goes down, which is quite often in certain parts of the country. Uh and I think that is another uh thing that is super valuable to consumers is that why would you not get something in your home that gives you lowest cost and is more reliable than a noisy generator or a polluting generator which requires a different fuel source.

And then also We are now realizing in the past few years this potential for an energy future that takes all of that kind of tariffing and improvements to the grid and putting power back to things and and then kind of realizing, like, oh, when you aggregate this. You have made a power plant. Um I am sure that you thought of this Way sooner than the last few years when people like me became aware. But how are you thinking about that side of the business and how is it evolving?

Uh last year, for example, uh our leading partner, Sunrun, uh, they dispatched about 500 megawatts.

of power from home batteries. And uh a third of that was dispatched by was was helped by dispatching through our software, the grid share And so we dispatched about one hundred and thirty megawatts of And so five hundred megawatts is a medium sized Pico plant, which requires natural gas, fossil fuel, imagine you didn't have to turn those natural gas speaker plants on, and you had these existing homes who are generally consumers of power, to suddenly say, Hey We can provide power to the great.

And that happened because all these homes had batteries. All these homes had a software that could connect all these homes, and then you had a market mechanism to incentivize these homeowners. And that proved a lot of points uh to the broader community. Uh to your point, we started the wor uh I started the first virtual power plant ten years ago.

With Mary Powell, who's now the CEO of Sunrun, she was at uh Green Mountain Power, a utility in Vermont where the first virtual power plant with uh residences were started about almost twelve, thirteen years ago Since then the size of the dispatches of power have been pretty small. under ten megawatts. So so nobody really paid much attention. But the last year's 500 megawatt dispatch really has woken everybody up to say this is now prime time. This is not a

concept. This is not uh you have sort of we have shattered all myths and challenges that people pose about virtual or distributed power plants. The first myth is that, oh, you can't aggregate and connect all these things. Well, well that's proven wrong. We can do it very easily. Well, consumers are not reliable. They will not actually give their capacity to you. Well, the third party finance model changes that. And also if you incentivize customers, they will

lend their services, which is proven. And the uptime can not be guaranteed. Well, five hundred megawatts shows that the uptime for these devices was pretty good. So I think more and more utilities are taking note of that. For example, in the Northeast, uh five states from Connecticut, Massachusetts, uh New York, Rhode Island, Maine have

Um in areas where and look, I I'm not propon I'm not the proponent that distributed power plants is the only way to solve power. You always need more centralized power plants and centralized solar storage is also a good idea and that will always dominate. But the grid is always overbuilt for its peak capacity, as we all know. And what the distributed power plant advocates like me are trying to say is that you have already overbuilt the grid.

So let's use that and fill with localized batteries in all the places to fill that to use that peak capacity much more efficiently. That's all we're that's all we're saying. And that itself contributes to gigawatts of power which you didn't have before. And so why would you want to invest in that excess make the grid even more generation heavy when you can actually fill localized storage and and fill that gap with the existing transmission line. So that's what we're trying to say.

And if you truly believe and you want speed to power and you want to avoid, and the last and is very important, if you want to avoid skyrocketing consumer bills, this is the only way out. So and that's why we're so passionate about it.

Like I said, we talked about enough about Northeast states giving that. Uh energy retailers in California are called the CCAs. Each of them have a unique program to give people incentive for installing batteries. so that it can reduce their resource adequacy costs. So ERCOT has quite a bit of uh uh potential to use batteries to participate in the wholesale market. So given energy markets and systems are complex.

Um we believe that each market will come up in its own way. Colorado has come up in a big way to say, hey, I want 50 megawatts of distributed power plants right away. So we believe tons of states are waking up and utilities are saying, Yeah, let's get this, especially given the speed to power and why this doesn't increase consumer bills. That's that's the that's the big reason I think people are waking up now.

I mean, should states be paying for this? California had a program that had enrolled quite a lot of people in home battery programs but then cut it because of of budget concerns. You know, like what does the What does the policy landscape look like in terms of deploying this quickly for the good of the grid?

for dispatching their power. Because especially in California, most consumers are getting this product anyways. Uh in other states like Northeast, this incentive m induces people to get batteries. But in California it's very different because the energy costs are so high. Like I said, if you're saving anywhere from two thousand to twenty five hundred dollars annually on electricity bills. with solar and storage, you're getting that anyway.

So now all of these homes in California have a a product in their home. All you have to do is incentivize them a little bit more and say, Hey, in in times of need, please push it to So to me it's a no brainer in California to promote virtual power plants. And but the challenge also is the utilities, their business model, and I'm not faulting the utilities for this, but their y the business model is to rate base. uh new CapEx investments on the grid. So there is no mechanism for the utilities.

to rate base virtual power plant payments. So the policy makers have to allow the utilities to rate base these payments they make. Such that the utilities can earn a return. Because it's it just comes back to that. So that centralized how do the utilities make money needs to get solved. F uh Otherwise the state will have to keep doing these programs like D SGS. So ideally the programs no don't need to be done done by the state.

'Cause if the public utility commission says, Hey utilities, we allow you to rate base these virtual power plant programs and you can earn a return from that That's great. Then they're then then th then they're not incentivized to only do CapEx investments, which is how they make money today. So that structurally we need the PUC to

change how utilities make money. But until then you need programs like DSGS to support. So So one way or the other, as you can tell, I I we str firmly believe this is a much much cheaper and faster way to both get more power at the right places and not increase consumability.

So that's why I tell everyone, a lunar system has four benefits. One is it lowers your energy bill. Hands down, lowest energy bill in any market, that's what we guarantee. Second one is in addition to lowering your bills, if you're part of a virtual power plan, you will make more money. This will be the only appliance you have on your house that pays you money. Imagine you buy a refrigerator.

Do you expect it to actually LG or Samsung to pay you money every every month? No. This is the only appliance you'll buy that actually sends you a check. Which is what we did last year. We sent All our customers who had that anywhere from three to five hundred dollars extra in addition to energy bill saving. So that's the second benefit. Third benefit is twenty-four-seven power when the grid goes out, noiseless.

uh pollution free, clean, just keeps running. Your neighbors are envious of you when uh you know, you have power and they don't because they don't have a lunar system. That's a third benefit. And the fourth benefit is you're running off clean energy. So why would you not do that? It's a no brainer. It's cheap, it's better, it's better for our next generation of kids and and the future we want to live in. So Got all the benefits here. So

uh with a bunch of different electrical appliances th so that can simulate what your um what your load is. Right. So uh we'll go over and we'll play around with the app a little bit. But you get a sense of like I don't know, it's funny, like businesses like this are

We sell silent boxes. Like that is a blue box that sits on the side of your house and doesn't make any noise and doesn't light up and doesn't do anything and these things on your roof sit there silently for twenty five years and they don't do anything.

And so the way that you actually have to get some connection on this is through the app. And so that's one of the things that we like to show people when they're in here of like, if I get this, like what can I actually see? What what is what behaviors would ever change in my life? Um and maybe we just kinda go and play around with that for a second. Cool. All right.

But if you look at this other wall over here, you kind of see the different sizes that you can go, um, all the way from thirty, which is positively NBA player-ish, all the way down to a fifteen, um, depending on what your home needs are. Um

But the the electrification thing is happening um nonlinearly. Like so for example, I have a small house, but I have an E V and a heat pump and a hot water heat pump.

And I uh the one that I have in my home is a twenty five kilowatt hour battery. Um just because that's what I need to get through the day. There are probably big houses that, you know, still have a bunch of gas and they would maybe want to start with a smaller one and get bigger. So yeah, really what you're talking about with those different numbers is how much

energy is inside of one of them. Um that you you know, really you need to be able to have enough to get through uh people buy these like really for two reasons. Maybe you have outages and you're like, I need to have enough juice and a battery to get me through one of these outages. Um increasingly in California though

You're doing it to m to save money. Um, which is so then you're looking at like, how do I get enough storage that I can not have to pay peak rates between four and nine? Um and that's gonna depend on all your life. Oh sorry, that's a very long answer of how how you size one of these things. But those are all kind of the um the considerations that I guess you'd have.

the energy situation in your house. Like what's going on? Um it can t do a bunch of things for you at this point. Where again, if you're one of the people who's really worried about outages, you can scroll down and be like, hey, if a power outage happened right now

With my like what would happen? Like how long am I good for? And it's gonna tell you that you're good for at least twenty four hours. I'll tell you that's partially because you're not using any power right now. Um but we can start turning some things on and you can get a sense of what that's like. Okay.

So that should immediately spike something. I just turned on an induction hot plate. So we turned on the induction hot plate and immediately you saw about uh one point six kilowatts, which is you know

medium amount of power um i immediately demanded. And so what's happened is we're no longer sending anything excess out back to the grid. We are taking the little bit of uh power that's coming off of the solar panels and taking some of the power that's coming out of the batteries and that's meeting everything in the home. If I were to say like maybe want some more It is turned on an oven. Um and you'll start seeing that number jump even more and that

now says you're only good for seven hours because you're using a lot of power and there are a few hours left of daylight today, but um that's gonna go away and you're gonna be left without. So what you might want to do is turn off something.

I think at that point, what can I turn on? Like what can I like where else can I use this? Can I, you know, you know, turn the A C on to make it really cold in the house? Can I plug an E V in? I I may I've even thought about like finding my neighbors with E Vs to be like

I will give you this power so I'm not just like, you know, throwing it away and you know,'cause they're gonna have to buy it for thirty five cents a kilowatt hour. It does turn you into an energy nerd, but I think we don't we try not to present that way to people'cause it can be very like, I don't wanna do math, I just wanna turn on a light switch kind of thing.

Um I guess I can show you what an outage looks like if you want to see that. Yeah. Cool.

So okay, there's a fun thing here that gets energy nerdy as well on controls over this. Sometimes these are going to happen and you're not going to be home. Um you probably wouldn't leave your oven running when you're not home, but there are other things. Imagine like leave a pool pump or even like your um your heat pump or something like that. There's something going on in a house. You're gone, power's out.

you're spending energy that way. Um, there are ways that you can basically control this energy to be able to extend how much uh backup you can get one of these. And this is what we have with this this lunar bridge product. This is um Ah, how to not get too nerdy with this. Anytime that you have a battery and solar and you want to be able to have backup protection.

Um when the grid fails you need what's called a m uh an MID, which is basically just a way that you island your house from the grid so you're not sending power back onto the line so it would electrify workers. So this is where we put that for us. Um, but it's also kind of just a regular panel and and in addition to that function. Uh inside of here we have these things that are called um uh they're they're made by Eaton, which makes, you know, breakers by the millions and billions. Um

they developed these with us. Uh they're smart breakers. So basically, uh you know, i in the event of an outage, you don't really want to have control over your Wi Fi. You you w you want your Wi Fi. You don't really want to control your freezer, you want your freezer. But things like an oven or an EV charger, things like that you might want to put on a heat p or uh I'm sorry, uh you might want to put on a smart breaker. Um so what basically that allows you to do if we look back at the app here.

Say Alright, well that range oven is actually using quite a lot of power right now and I only have it, you know, I I'm draining the battery, so I'm just gonna go in here. I'm gonna turn it off. Turn it off, confirm, it clicks off. And then you'll see that, hey, actually, um in this case, you have quite, you know, you're gonna last quite a long time. Um if for whatever reason you wanna just bring it back on, you can do that too. And so we have two ways to do these in the app.

You can do something manual control, which is what I've been doing here. In my home I have these set to automatic control. So the EV charger immediately turns off in the event of an outage. I don't want to move energy from one battery to another battery. Uh and then if uh the battery is below sixty percent for my home, uh my heat pump will drop.

basically just to make sure that I'm not losing like things that can't be replaced in a freezer. So you can just more controls for you, more ability to think of your home uh in a different way. I mean I think if you think of like residential solar one dot oh you slap these things on your roof, you don't you have your energy bills go away. Um as these things just get smarter and smarter it's doing more for your for uh for what you can actually control in your home.

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