AI's Impact on the Grid

🧠 Insights You Won’t Forget

Today's insights are inspired by a recent episode of Invest Like the Best w/ Zach Dell

1. The Grid Is a 100-Year-Old Machine Built for a Different Era

   The U.S. electrical grid is a real-time, demand-supply balancing machine with no effective storage, and it’s woefully outdated for the coming surges from AI, electric vehicles, and industrial electrification.

2. Base’s Breakthrough: Batteries as a Distributed Utility

   Instead of relying on utility-scale infrastructure, Base installs home batteries for $500 upfront and $16/month. These serve as both backup for homeowners and real-time grid support, bypassing interconnection and transmission bottlenecks.

3. Energy Arbitrage at Scale

   Base leverages batteries to buy electricity when it’s cheap (midnight–4 AM) and sell or use it when it’s expensive (early evening). This real-time pricing model enables energy arbitrage that powers their economics.

4. Vertically Integrated to Crush Costs

   Base controls everything from battery design and manufacturing to installation, power sales, and trading. This full-stack integration gives it a compounding cost advantage in a commoditized market, critical for staying ahead.

5. Batteries Move Energy Through Time

   Zach compares batteries to grid infrastructure like poles and wires, but instead of space, batteries solve the problem of time. This framing positions distributed batteries as a fundamental grid asset, not a luxury backup tool.

6. Unit Economics: A 2–4 Year Payback with Long-Term Upside

   With costs trending down from $10K to potentially $6K per install, unlevered paybacks on batteries are already under 4 years. When leveraged and scaled, IRRs become highly attractive for capital markets.

7. Texas: The Energy Innovation Sandbox

   Due to deregulation and geographic advantages, Texas has become the most fertile ground for energy innovation in the U.S. Base leverages this by operating in a competitive retail energy market and partnering with co-ops.

8. Future Grid = Software-Defined + Distributed

   Base envisions a future where smart home appliances (EV chargers, water heaters, HVAC) are coordinated via home batteries, turning homes into intelligent energy nodes, a form of distributed virtual power plant.

9. Capital Strategy as Crucial as Tech

   Financing is as innovative as the tech: Base uses tax equity, asset-backed lending, and aims for securitization, mirroring what Sunrun did for solar. The batteries are positioned not just as tech but as structured cash flow assets.

10. Cultural Flywheel from SpaceX and Tesla DNA

    Core team members come from SpaceX, Tesla, and Anduril, instilling extreme ownership, speed as a weapon, and clarity in decision-making. Base applies tech startup pace to physical infrastructure.

Recall from last week

1. Return on Time: A Framework for Career & Life

   Waxman’s “future self” lens, building skills early to maximize time with family later, is a mental model for optimizing life as much as investing. Intentional, compounding self-improvement is central to the firm’s development culture.

2. Personal Business Plans for Every Employee

   Every team member writes an annual personal business plan tied to the firm’s five-year strategy. Goals are broken into manageable chunks and reviewed continuously, a powerful operational model for aligned personal and firm-wide growth.

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🛤️ Off the Record

Happy Monday, hope you had a fun weekend!

This episode isn’t just a story about batteries, it’s a quiet manifesto for rebuilding America’s energy system from the outside in. Zach Dell is framing Base as a battery subscription company, but the subtext is far more ambitious: he’s constructing a parallel grid, node by node, home by home. Traditional utilities are shackled by regulation, slow timelines, and outdated incentives that reward CapEx over innovation. Meanwhile, Base is vertically integrating everything, design, installation, power trading, customer acquisition, but at startup speed. They’re not asking for permission from regulators or legacy incumbents. They’re skipping the lines entirely by embedding energy infrastructure directly into the homes of tens of thousands of Texans.

The deeper insight here is that the battery is just the wedge. What Base is really building is a distributed computing platform for energy, one that can eventually coordinate HVAC, EV charging, water heating, and rooftop solar like a smart grid operating system. The goal isn’t just backup power during outages or shaving a few bucks off your bill. It’s about turning every home into an intelligent energy asset, monetizable in wholesale markets and controllable at scale. And with each new install, Base is accumulating something far more valuable than lithium: data, trust, and infrastructure ownership. If they succeed, utilities won’t just be disrupted, they’ll be disintermediated. The grid of the future won’t look like more wires. It’ll look like 10 million batteries thinking together.

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Answer:

• Distributed placement avoids long interconnection delays.

• Co-location with demand reduces transmission costs.

• Vertical integration lowers hardware and operational costs.

• Returns are structured as financeable cash flows, inviting capital market participation.

• Utilities might adopt or partner with VPPs or lobby to protect their regulated monopolies.

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