Lunar Energy enters solar+battery field with $300M investment

Sunrun, SK Group and others back the startup’s plan to break into a crowded market with integrated home battery systems and broader energy controls.

Lunar Energy CEO Kunal Girotra in the company's Mountain View, Calif. lab
Lunar Energy CEO Kunal Girotra in the Mountain View, Calif. lab where his startup is building an “end-to-end home battery system” with backing from Sunrun and SK Group (Lunar Energy)
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The residential market for solar systems paired with batteries is complicated, with lots of companies competing with one another and sharing customers at the same time. All have different offerings, each with its pros and cons and available in various configurations.

As the former head of Tesla’s residential energy business, Kunal Girotra understands just how complicated that market is. As CEO and founder of newly unstealthed startup Lunar Energy, he sees room for an end-to-end home battery system” to break through the clutter — and for a broader set of technologies down the road to transform homes to 100 percent clean energy.” 

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Wednesday’s unveiling reveals significant backing for this concept. Since its quiet founding in 2020, the Mountain View, California–based startup has raised two investment rounds adding up to $300 million, led by U.S. residential solar leader Sunrun and South Korean battery giant SK Group. 

Other investors include Japanese trading conglomerate Itochu and automaker Honda, which have both taken a minority stake in the company. That stake comes as part of Lunar Energy’s acquisition of Moixa, a U.K.-based software provider that’s managing a fleet of 35,000 residential battery systems in Japan and more in the U.K.

Lunar Energy has hired about 250 employees and built a 35,000-square-foot manufacturing facility in Mountain View, Girotra said in a Wednesday interview. Its first product, expected to be available in the next few months, will be a combination of battery modules, power electronics and software, all designed from the ground up,” rather than the cobbled-together systems common today that combine this component from this company, that component from that company.” 

There are competitors in this space,” Girotra acknowledged. Some of the myriad companies pairing batteries with solar include battery vendors Tesla, LG Energy Solutions, sonnen, Generac, Panasonic and Electriq; solar installers Sunrun, Sunnova and SunPower; and solar inverter providers Enphase and SolarEdge. But the home battery system market is still an expensive proposition for homeowners,” with costs compounded by the market’s complexity. There are a lot of boxes on the wall, they’re not integrated — they come from different manufacturers.”

This mix-and-match ecosystem can confuse homeowners and installers, he said. It’s not always clear which combination of systems is best suited to provide backup power during grid outages, or how much juice batteries need to store up to keep different combinations of home loads running over extended periods of time, for example. 

Nor is it always clear which of the vendors involved is in charge of managing the interplay of solar-generated power, battery storage capacity and household loads. Handling those tasks effectively is important to save the most money possible for customers signed up for time-varying utility rates — or for customers to earn money by signing up to bid their battery capacity into utility or energy market grid-services programs. 

Lunar Energy hopes to win over customers and partners by designing architecture that will be super easy to install, looks compact and elegant in your home, and does grid interaction and microgrid formation in a very seamless manner,” Girotra said. 

Girotra declined to offer details on how much Lunar Energy’s first battery system would cost, how much electricity it would store, or other specifications. Nor did he expand on what kind of products to control loads and appliances in the home” the company might be planning to unveil next.

Getting the software right

Lunar Energy is far from the first company with the idea of owning the home” through new and elegant energy-management technology, Dan Finn-Foley, energy transition and storage expert for PA Consulting, said in a Thursday interview. So far, those attempts haven’t succeeded — but the market is still in its early stages, he noted. 

You could make a compelling argument that the majority of residential storage on the grid today has no economic reason for existence,” he said. A large proportion of these storage systems bought by early adopters have been more emotional decisions. They’ve been driven by the cool factor,’ or spending money on nonmonetary factors, like using your own solar power or having clean backup power.” 

But according to Finn-Foley, this situation is now changing pretty dramatically.” First, the costs of solar and batteries have continued to fall precipitously, although supply-chain constraints have disrupted this downward trajectory. Second, a set of virtual power plants — collections of homes with a combination of rooftop solar, batteries, smart thermostats and remote-controllable electric vehicle chargers and appliances — have begun to prove that they can deliver value to utilities and to customers. 

To truly be a smart-home provider, not just smart whole-home controls but at the grid level, the key barrier is software,” Finn-Foley said. 

Girotra said that Lunar Energy has developed its own software to do things like keep the battery safe, control on and off-grid ramifications, or communicate from the solar to the battery.” For much of the remainder of the software functionality involved, Lunar Energy will be making use of Moixa’s GridShare software, he added. 

Once the battery sends the data up to the cloud, that data is represented in a consumer’s mobile app and in the installers’ installation app, and also…aggregated with thousands of other batteries in the cloud platform,” he said. And it should make smart decisions for the home” using a set of machine-learning algorithms that Moixa founder Simon Daniel, now Lunar Energy’s senior vice president of special projects, has described as a key competitive advantage compared to other companies offering similar capabilities. 

Moixa’s experience managing batteries, appliances and EV chargers in the U.K. and Japan include the aforementioned 35,000-home, 3,330-megawatt-hour aggregation, one of the largest of its kind, in partnership with Itochu and utility Tokyo Electric Power Co., Girotra noted. 

The platform is scalable and transferable from one geography to the other,” he said. In fact, Moixa is operating in the U.S. today, he added, although he declined to name the customers it’s working with. 

Sizing up the competitive landscape for home solar-plus-battery systems

Lunar Energy faces a lot of competition on all of these fronts. Pretty much every company offering home batteries in combination with solar systems also offers software, services and support designed to make those systems more responsive to customers’ needs, better at providing emergency backup power and grid services, and more capable of integrating EV chargers and smart appliances. 

Some of these providers have taken an in-house path to accomplish this. For example, Generac, the leading U.S. manufacturer of backup generators, has acquired companies to supply its own batteries, its home energy management and grid aggregation software, and most recently, its smart thermostats. Microinverter maker Enphase has engineered its battery systems and grid-services offerings around its core microinverter products.

But even while some notable companies have adopted an in-house model for product development, partnerships have also driven a lot of the home solar-battery market’s evolution to date. Tesla is running its own virtual power plants to ease summer grid strains in California but also partnering with utilities using other software vendors for VPP implementations in Vermont and Australia, for example. Span, the smart electrical panel startup founded by another Tesla alum, has inked partnerships with LG Energy Solutions, Tesla, SolarEdge and Sunrun and is integrating EV chargers into its system. 

It’s not clear yet which of these paths Lunar plans to follow, although Girotra emphasized the importance of its investors in helping the startup break into the increasingly crowded market it’s targeting. The SK Group and Sunrun are investors and…strategic partners,” he said. SK plays partnership and supply, Sunrun plays partnership and demand.” 

Just how those partnerships may translate into active business relationships remains to be seen. A statement issued by Lunar Energy on Wednesday included supportive comments from both Sunrun and SK

I’m excited to see Sunrun, and the industry at large, begin offering Lunar Energy solutions to millions of homes across the nation,” said Lynn Jurich, the co-founder and co-executive chair of Sunrun who’s also chair of Lunar Energy’s board of directors. Sunrun doesn’t make its own battery systems but is partnering with a variety of technology providers as it seeks to expand beyond rooftop solar to more comprehensive home energy and grid services. 

We believe that Lunar has the potential to revolutionize how homes across the U.S. and the world use renewable power,” said Ian Huh, executive vice president of SK E&S, SK Group’s energy arm. SK has pledged to invest billions of dollars in EV battery production and clean energy in the U.S. and has acquired several U.S.-based EV charging and grid-scale battery development companies in the past 12 months. 

A key challenge for Lunar Energy and other home battery contenders is cost, according to PA Consulting’s Finn-Foley. A lot of that comes down to scale, but a big part of that will be customer acquisition,” he said. How are they going to be building a pipeline of customers to make this work? And what are customers going to be expecting in the form of returns?”

Girotra acknowledged the challenges Lunar Energy will face in scaling up manufacturing and hitting competitive price points. We don’t think the product will be successful if you don’t deploy at scale,” he said. But he also highlighted the potential for more presale product integration to take costs out of the product stack by combining things, eliminating things, not duplicating things.” 

And he emphasized the potentially immense scale of the market Lunar Energy is entering. Of the roughly 75 million single-family homes in the U.S., only about 2.7 million have rooftop solar, and far fewer of those have batteries, he said. Growing that share of residential solar will help reduce carbon emissions and combat climate change. 

As that share of solar grows, batteries will play an important role in storing their output at midday and discharging it when it’s in short supply — something that solar-rich states like Hawaii and California are already trying to encourage through rate structures and incentives. EVs and electric home heating, both vital decarbonization tools, will either strain the grid or become energy-shifting resources in their own right. 

If every home will have an electric car and solar panels and home batteries,” Girota said, and the home goes electric, the opportunity is massive.”

Jeff St. John is director of news and special projects at Canary Media.