The ex-Tesla executive's bet: American households will pay for batteries that pay them back
There's a paradox at the heart of the home battery business. The hardware—those sleek white boxes homeowners mount in their garages—often sells at thin margins or worse. The real money, increasingly, lives in the software: the algorithms that decide when to charge, when to discharge, and how to turn thousands of distributed batteries into something resembling a power plant.
Lunar Energy is making that bet in a big way.
The Mountain View startup announced Wednesday it has closed $232 million across two rapid-fire funding rounds, a $130 million Series C led by Activate Capital and a $102 million oversubscribed Series D co-led by B Capital and Prelude Ventures. The dual raise brings the company's total capital to north of $500 million since emerging from stealth just three years ago—a signal that investors believe the home energy storage market, for all its growing pains, still has room for challengers to Tesla's dominance.
DCVC, Piva Capital, Leitmotif, Sunrun, Itochu Corporation, and Q Capital Partners all participated across both rounds, though the company declined to disclose its valuation.
Founded in 2020 by Kunal Girotra, who spent two years running Tesla Energy before striking out on his own, Lunar has already deployed thousands of its modular battery systems across California. Now it's preparing to push into Texas, Puerto Rico, Hawaii, and a handful of other states while ramping manufacturing to 20,000 units by late 2026 and—more ambitiously—100,000 units by the end of 2028.
Those are aggressive targets in a market that added roughly 1.25 GW of residential storage in 2024, up 57% year-over-year according to Wood Mackenzie and the American Clean Power Association. But here's the complication: analysts are forecasting contractions in 2026 and 2027 as the market digests policy shifts and recalibrates expectations. The rebound, when it comes, will favor manufacturers who can produce domestically at scale.
Hardware Designed for the Tax Code
Lunar's approach reflects the realities of the Inflation Reduction Act. The company designs its systems in California but assembles them in Georgia and Washington, a geographic footprint engineered to qualify for U.S. clean energy investment tax credits. The hardware itself is modular—usable energy ranges from 10 to 30 kWh in 5 kWh blocks, delivering 9.6 kW continuous power and up to 15 kW at peak output.
It's competitive specs in a crowded field, though perhaps not revolutionary. What might distinguish Lunar is what happens after installation.
The company has been available primarily through Sunrun, the residential solar installer that currently owns approximately 37% of Lunar according to 2023 investor materials. Sunrun has been more than a strategic investor—it's been Lunar's primary distribution channel since the startup emerged from stealth in August 2022 with $300 million in initial backing. That relationship provides scale, but it also raises questions about how easily Lunar can diversify beyond a single partner as it expands geographically into Texas, Illinois, Nevada, and Utah.
The Virtual Power Plant Angle
Here's where the story gets more intriguing.
In 2022, Lunar acquired Moixa, a UK-based company whose Gridshare platform manages virtual power plants—networks of batteries that can be orchestrated to provide grid services. That software now oversees roughly 650 MW of distributed energy resources globally, including more than 35,000 residential batteries in Japan through a partnership with Itochu.
In the U.S., Gridshare powers VPP programs for Peninsula Clean Energy and Silicon Valley Clean Energy, with plans to aggregate up to 25 MW over five years. The platform also underpins Sunrun's expanding VPP portfolio, which enrolled 106,000 customers across 17 programs in 2025, dispatching 18 GWh and hitting 416 MW of peak output.
The pitch to homeowners: let Lunar's AI-driven optimization discharge your battery during peak demand events, and you'll earn payments while helping stabilize the grid. The company claims customers averaged $464 in VPP payments plus an additional $338 in savings compared to standard battery modes over the past year. Not life-changing money, certainly. But perhaps enough to shift the economics of battery ownership from nice-to-have to financially rational.
Whether utilities and grid operators will reliably compensate residential batteries at those rates as VPPs proliferate remains an open question. Early adopters often see better returns than late arrivals.
Scaling Against the Powerwall
Lunar now employs more than 226 people and landed the No. 4 spot on Forbes' Best Startup Employers list for 2025—a marker of ambition, if not yet market dominance. The company is betting it can carve out share with a dual value proposition: installer-friendly hardware that qualifies for federal incentives, and software sophisticated enough to extract revenue from batteries by orchestrating them into grid services.
It's a reasonable strategy. But execution in hardware is unforgiving, and Tesla's Powerwall remains the name that homeowners actually recognize. Girotra knows that brand intimately—he helped build it—which may be both advantage and burden. Replicating that scale outside Tesla's ecosystem, with its vertically integrated manufacturing and solar business, is another matter entirely.
The capital gives Lunar runway to find out. Whether the company can hit its manufacturing targets while the residential storage market contracts and then recovers will determine if this becomes a durable challenger or another well-funded entrant that couldn't quite scale.
For now, investors are betting on the software story as much as the hardware. They may be right that the real value in home batteries isn't the lithium and circuitry—it's the intelligence that decides what to do with them.
