LG Chem, the world’s largest automotive battery maker, will enter the fledgling U.S. market for home energy storage through a partnership with rooftop solar company Sunrun, the companies said on Wednesday.
The move will put LG in direct competition with electric car maker Tesla Motors (TSLA), which unveiled its own home battery packs, called Powerwalls, last year. Sunrun (RUN) has been using Tesla batteries in its home storage systems in Hawaii since earlier this year, and this deal will add LG to its list of suppliers.
Financial terms were not disclosed. The agreement is not exclusive to either party, Sunrun said.
“Tesla makes all the headlines, but LG manufactures most of the lithium ion batteries,” Sunrun Executive Chairman Ed Fenster said in an interview. LG’s entry into the market will help bring down battery prices and help them make economic sense for more households, he added.
The deal comes as Tesla is planning to buy Sunrun’s bigger rival, SolarCity (SCTY), as part of its bid to sell a fossil fuel-free lifestyle in which people can have solar panels on their roofs generating electricity to power their homes, charge home battery packs and recharge their electric car batteries.
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Home battery systems allow customers to store solar power generated during the day for use after sunset. Eventually, as utilities move to charging higher rates for power used in the evening, when demand is greatest, the batteries could bring customers significant savings. Battery packs can also serve as a backup power source in case of an outage.
Sunrun currently offers batteries with its solar installations only in Hawaii, where sky-high power prices make such systems economically attractive. The batteries have enabled many residents there to supply all their own electricity needs without relying on the grid.
For more about Sunrun, read: Samsung Is Reportedly in Talks With This Tech Giant for New Smartphone Batteries
Most of Sunrun’s battery systems are deployed through leases or power purchase agreements, which allow consumers to use the technology by paying a monthly fee and avoiding a large upfront cost.
In addition to Sunrun customers, LG Chem’s batteries will be available to the entire solar industry through AEE Solar, Sunrun’s solar products distribution arm.