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Silicon Valley–based startup Lunar Energy has spent the last six years building a business for its smart home batteries and the virtual power plant software that can orchestrate those systems to support the grid at large. Now, it has a massive new pot of cash to expand that effort, as utilities and state policymakers look to leverage such technologies to help meet soaring power demand.
On Wednesday, Lunar Energy unveiled $232 million in new funding. The investment is made up of a $102 million Series D round led by B Capital and Prelude Ventures, which closed in recent months, and a previously unannounced Series C financing of $130 million led by Activate Capital in 2024.
Added to the $300 million round Lunar Energy raised in 2022 from investors including U.S. residential solar leader Sunrun and South Korean battery giant SK Group, that brings the total investment to just over half a billion dollars. Lunar Energy CEO Kunal Girotra, who previously led Tesla’s residential energy business, declined to share the startup’s revenues or expectations for profitability. But he did say, ​“This capital helps us, in a big way, in achieving our goals of not having to raise ever again.”
Much of the new money will go toward expanding Lunar Energy’s manufacturing capacity for its home battery and energy-control hardware, he said. The company produces its equipment in California, Georgia, and Washington state and has installed it in about 2,000 homes and businesses in California. The firm plans to increase its manufacturing capacity from about 10,000 battery systems per year today to 20,000 per year by the end of 2026 and to 100,000 per year by the end of 2028, Girotra said.
Home batteries are a competitive market, with Enphase, FranklinWH, Generac, LG, SolarEdge, Sonnen, market leader Tesla, and other companies all vying for customers. Lunar Energy’s systems are priced on the higher end of the spectrum, with typical installation costs coming in at about a 10% premium to Tesla’s Powerwall batteries, Girotra said.
But Lunar Energy’s system comes with a bunch of integrated hardware that differentiates it from many other home batteries, Girotra said. It includes modular batteries that can provide 15 kilowatt-hours to 30 kilowatt-hours of storage, allowing consumers to build a system that is rightsized for their homes. Lunar Energy also incorporates inverters and optimizers to efficiently convert power from rooftop solar panels into stored electricity. And its digitally controllable circuit breakers mean that homeowners can use a smartphone app to control which household circuits solar and battery power flow to; this can be useful for emergency backup or to save on utility bills on a daily basis.
“With the other companies, you have to add other components to them to get an apples-to-apples comparison,” Girotra said. ​“And we’ll be closing the [price] gap with Tesla very soon.”
Then there’s Lunar Energy’s virtual power plant software, which allows the company to control home batteries, EV chargers, and other power-using appliances. The VPP technology essentially lets these distributed energy resources act in tandem to function like a traditional power plant.
The company first began its foray into VPPs in 2022, when it acquired the U.K.-based startup Moixa, which managed batteries, smart thermostats, and other controllable devices in Japan and the U.K. That software now controls close to 150,000 devices in homes, including those of Sunrun customers participating in VPP programs in California, Hawaii, New England, and Puerto Rico, Girotra said.
Lunar Energy plans to also expand its VPP services this year, Girotra said, partnering with several of California’s community choice aggregators and retail electricity providers working in competitive markets. By year’s end, the company expects to have customers in several more states, such as Texas, which has become a major target for VPPs from major energy retailers, smart-thermostat providers, solar-battery installers, and manufacturers of stand-alone backup batteries.
Clean energy advocates and experts expect that VPPs are the path to making rooftop solar and battery systems successful in the Trump era, as rooftop solar alone becomes an increasingly tough proposition in many markets.
The megalaw passed by Republicans in Congress last year ended decades-old tax credits for homeowners installing clean energy systems, tamping down growth expectations for the rooftop solar industry, although third-party installers can still use tax credits for some time. Meanwhile, California’s 2023 cuts to rooftop solar incentives have led to a steep drop-off in installations in the country’s leading market.
But pairing solar with batteries boosts homeowners’ energy bill savings — a significant motivator for consumers as utility rates spike across much of the country, including in California.
Many states are looking to use VPPs to avoid investing in costly traditional power plants to meet skyrocketing power demand — a surge driven by data centers, factories, and the rapid electrification of buildings and vehicles. VPPs provided hundreds of megawatts of grid relief last summer in California, Puerto Rico, and New England, and states including Colorado, Illinois, Maryland, Minnesota, North Carolina, Utah, and Virginia have passed laws or are pursuing regulatory action to expand their use.
Lunar Energy isn’t the only company raising money on the prospects of VPPs. Texas-based startup Base Power raised $1 billion last year to ramp up manufacturing capacity for batteries it installs at low or no cost in homes and businesses. The company then leverages these systems into a VPP that it can use to earn a profit in the Lone Star State’s competitive energy markets.
And San Francisco–based startup Span — which makes smart electrical panels that let homeowners, businesses, and utilities digitally control power flows between solar installations, batteries, EV chargers, and other building loads — is in the midst of raising a $176 million investment round.
Data from the subset of Lunar Energy systems in VPPs under its own control shows that customers earn an average of $464 per year by participating in those programs. That’s on top of the $338 that Lunar Energy customers save on average each year by fine-tuning their home energy systems to consume grid power when it’s at its cheapest and most plentiful.
“We see behind-the-meter storage with software as a key element for solving the power-demand problem,” Girotra said. ​“If you give people more of these devices and you let them control them, you suddenly have a grid that doesn’t have to build the 5x — or 5,000x — capacity that we’re asking for in a short amount of time.”
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