Five trends that are shaping the new market for distributed capacity

Home batteries and rooftop solar are becoming part of a bigger shift in how the power grid works, and it could change what's available to homeowners. Rising electricity demand, driven partly by AI data centers, is pushing utilities and companies to rely more on networks of small home-based devices, called virtual power plants, instead of building new power plants. These setups link together things like home batteries and electric vehicle chargers so a utility can draw on them when the grid needs extra power.

Several companies are striking deals to build these networks. Tesla, Sunrun, and Renew Home are combining forces to offer a large pool of flexible home power capacity to utilities and large tech companies. In Texas, Octopus Energy and Lunar Energy are offering homeowners a discounted home battery paired with fixed electricity pricing for three years, while Base Power is expanding battery programs with a utility co-op there and has started signing up customers in Illinois. Falling battery prices are a big reason this is happening: costs have dropped sharply over the past three decades, making it cheaper to install and manage batteries as grid resources.

States are also getting involved, often citing the goal of lowering utility bills. New Jersey, Virginia, California, and New York have all taken recent steps, from executive orders to new laws, to encourage or fund these home-battery and demand-management programs. Rules and incentives still vary widely by state, so what's on offer where you live depends on local policy and utility programs.