Lunar Energy bets on a seamless ​‘ecosystem’ for home electrification

There’s a long-running debate in the home-electrification space: Can homes of the future, equipped with solar, battery and digital energy controls, work with cobbled-together technologies from different vendors? Or does the market need vertically integrated systems that can handle the complexity of emergency backup power, utility bill shaving and virtual power plant participation for customers and contractors — even if they do come at a price premium?

Kunal Girotra, CEO of deep-pocketed Silicon Valley startup Lunar Energy, falls squarely on the vertically integrated side of this debate. On Wednesday, his company unveiled a fully integrated battery, inverter, home power controls and software suite meant to bring the concept to U.S. homeowners, starting this fall.

“The existing products in the market are acting like widgets,” Girotra said during a virtual tour of Lunar Energy’s test lab at its Mountain View, California headquarters, where he demonstrated the technology stack that Lunar Energy has raised $300 million to develop and bring to market. ​“What we need is an ecosystem solution.”

The company’s platform aims to solve what has become a challenge for homeowners looking to go electric: It can be messy to integrate solar panels from one company, batteries from another and a whole host of appliances from other manufacturers. Lunar Energy is far from the first player in the market, but Girotra’s chops as former head of Tesla’s residential energy business — and the huge pot of money the company has raised — make its new platform noteworthy.

Lunar Energy’s ​“ecosystem” includes modular battery systems that can be configured to offer between 10 and 30 kilowatt-hours of stored electricity, he said. It also includes an inverter that can switch from grid to backup power within 30 milliseconds — fast enough to avoid even a momentary loss of power to sensitive appliances or consumer electronics.

To control a home’s air conditioning, electric heating, pool pumps, kitchen appliances and other major power loads, Lunar Power offers a ​“Lunar Bridge” product that can be installed alongside a home electrical panel, along with digital, Wi-Fi-enabled circuit breakers that can plug into existing panels, he said. And its software application suite gives homeowners real-time visibility and control over all those parts.

The package also uses the GridShare software Lunar acquired from U.K.-based startup Moixa last year. That software is now orchestrating the virtual power plants — collections of solar-and-battery-equipped homes that utilities or grid operators can call on to balance the grid — operated by leading U.S. residential solar installer Sunrun, an investor in Lunar Energy and a key installer partner for the startup’s newly launched technology suite.

That software doesn’t just control the interplay of solar and battery power and the big power-using devices and systems in homes, Girotra said. It also forecasts their interaction for hours and days into the future, helping homeowners plan ahead to ride through potentially dayslong power outages or to maximize their money-saving and earning potential against changing utility rates or opportunities to send power back to the grid.

“Today, these systems exist in isolation,” he said. Home batteries from longstanding market competitors including Tesla, sonnen, LG, Generac, Enphase, SolarEdge and others vie for market share against newcomers such as FranklinWH, Electriq Power and dozens of other contenders, all offering various degrees of integration and all working with different solar installers.

Meanwhile, global electrical equipment providers such as Schneider Electric and Eaton and startups such as Span and Lumin offer home energy control technologies like smart electrical panels and digital circuit breakers that can control how much energy is being used by big household loads. And a host of companies offer software to manage home solar and battery systems and energy-using devices to support the power grid.

But getting these technologies to work together can be a bit of a slog, according to contractors.

“You’ve got to get a different panel or a different app” for each technology from each company, he said. Sometimes companies may have put in the work to ensure that these different technologies can work together, but more often than not, ​“these apps don’t talk to each other.”

With the Lunar Energy product suite, by contrast, ​“everything downstream of the solar panel is designed, created and built by Lunar,” he said. ​“There’s no third-party IP or third-party products.”

Girotra has direct experience with the value of vertically integrated technology from his time at Tesla. Tesla’s Powerwall has taken an early lead in the residential battery market, and it has consistently ranked high among customers and contractors for its reliability and features like seamless home backup power — even if it does cost more than many competing products and take months to years for contractors to get it. 

Breaking into the solar, battery and home-electrification market

The big question for Lunar Energy is whether its vertically integrated product suite can break into a nascent but already crowded landscape.

Girotra declined to provide any pricing data, noting that it will depend on how the installers and contractors that it works with end up pricing the product to homeowners, although he did say it will be a ​“very competitive price…compared to anything else out there.”

But making home battery and energy control systems that work is an expensive proposition, said Barry Cinnamon, a longtime Silicon Valley solar entrepreneur and CEO of solar and battery installation firm Cinnamon Energy Systems. Over the past five years, Cinnamon has focused on mastering battery installations in his home state of California, the epicenter of U.S. residential solar-plus-battery adoption.

“It takes an army of people to be successful in this market,” he said. ​“It’s easy to do the first step — ​‘I’ve got some cool hardware.’” But beyond that, ​“you need certification to get through the jurisdictions. You need testing to make sure what’s coming off the production lines is good. You need ramping up of manufacturing of batteries, and packaging, and hardware, and electrical components.”

And that’s just the hardware, he said. ​“You need four layers of software — software for the user, software for the installer, software to administer a fleet of systems,” and eventually, software to support operating that fleet of systems as a virtual power plant, he said. Finally, companies will need to provide ​“a lot of customer service and handholding,” he said.

Cinnamon name-checked four companies that offer what he considers to be a well-integrated and seamless home battery and energy management technology suite. Three of them — Tesla, Enphase and SolarEdge — are well-established, publicly traded companies with global reach. The fourth, FranklinWH, is a relative newcomer that’s gained significant traction with its hardware and software suite, albeit at a higher price point than many competing systems.

“You can look at the companies that have failed to get market traction to see they didn’t have the horsepower and financial backing to make it work,” he said. ​“Consumers want it if you’re half the price — but you can’t afford an army at half the price.”

Many home-battery vendors sell their products to contractors at prices between $8,000 and $10,000, Cinnamon added. But ​“a very realistic rule of thumb for a sustainable contractor — not a here-today, gone-tomorrow contractor — is you’ve got to double” that price to the homeowner to cover the cost of permitting, installation and ongoing support, he said.

Lunar Energy is making the bet that a smoothly integrated product suite may be more attractive to solar installers and contractors, compared to more stripped-down battery technologies that require lots of work from the contractors installing them.

“There are a lot of single-product offerings, like a battery only or inverter only or smart panel only,” said Kevin Fine, Lunar Energy’s head of engineering. ​“That puts the installer in this awkward position of trying to put together an offering for the homeowner with all of these different parts. It puts them in this integrator position, and quite honestly, that’s a hard place to be in, and that’s not what those companies are the best at doing.”

That’s particularly problematic if the aggregated systems from different manufacturers end up working poorly or not at all when homeowners need them the most, he said — like when blackouts hit. ​“Suddenly, you’ve got a customer having a really adverse experience,” he said.

As the opportunities for homeowners to participate in virtual power plants expand, this kind of easy-to-use visibility and flexibility is going to become more important, Girotra said.

“We are using our load prediction, weather prediction and solar prediction and making decisions in real time, going to the cloud and back to every device to say, ​‘You should charge now’ or ​‘Now’s the time to export power to the grid,’” he said.

Today, fewer than 4 million of the roughly 82 million single-family homes in the U.S. have rooftop solar, and less than half a million have batteries, he said. But ​“as more and more homes get solar and storage and controllable loads, this needs to be in the hands of the consumer,” he said.