Fa-Ba dampens enthusiasm: the grand narrative of household batteries as "virtual power plants" meets resistance, as the lofty vision of 17 gigawatts cannot hide the stark economic reality in the short term.

Boosted by the grand idea of "connecting batteries from thousands of households to form a virtual power plant and support the increasingly stressed US power grid", CECEP Solar Energy and Clean Energy Fuels Corp. have recently seen continuous uptrends. However, in a report released on June 26, BNP Paribas analyst Moses Sutton warned investors not to get carried away by market enthusiasm and blindly chase high prices. Recently, a plan announced by Sunrun (RUN.US), Tesla, Inc. (TSLA.US), and energy services company Renew has sparked market imagination: the three parties together can dispatch up to 17 gigawatts of battery and HVAC capacity to support grid peak-shifting. As a reference, 17 gigawatts is enough to meet the electricity needs of millions of households. Encouraged by this, Sunrun's stock price surged more than 20% in a single day, with the market betting that it could open up new revenue sources by bundling with electricity grid services and AI data center power demands. This debate reflects a core investment proposition: as the demand for electricity increases with the advancement of AI computing power, data centers, and electrification processes, can Clean Energy Fuels Corp. gain substantial incremental revenue through grid stabilization services? If the path is successful, companies like Sunrun can not only profit from selling solar systems and energy storage equipment, but also lease out excess power capacity to utility companies and grid operators for additional revenue. However, BNP Paribas believes that the economic calculations may not be as lucrative as the market expects. Scale question: Is the 17 gigawatts just on paper? Sutton pointed out that the numbers being discussed are severely disconnected from the actual installed capacity of household batteries in the United States. According to the report, the total installed capacity of household batteries in the US so far is approximately 6.7 gigawatts, heavily concentrated in California. The surplus capacity of the California grid may not necessarily be able to be transmitted to regions like the Mid-Atlantic and the Midwest where data centers are growing rapidly. After excluding factors such as geographic constraints, existing contractual obligations, and competition from rivals, BNP Paribas estimates that the actual capacity available for new grid support projects in the short term may be only a fraction of the announced figures. Even in an optimistic scenario, if 2 gigawatts of battery capacity participate in regional electricity markets, the annual income would be only about $90 million and this income would also need to be shared with end users and technology partners. Sutton admits that this opportunity is real, but until the details are finalized, the market may have given it an overvalued status. Data centers may be forced to build their own "emergency power sources" The report also focuses on PJM, the regional grid operator covering the Mid-Atlantic and parts of the Midwest, which is exploring how to connect large new electricity users such as AI data centers to an already overloaded grid. According to revised proposals, the requirements for large users to reduce electricity consumption in times of power shortage will be decided by individual states, rather than PJM making a unified decision. For data center developers, this change may actually increase uncertainty. BNP Paribas predicts that most new data centers will continue to build large-scale backup power generation systems such as natural gas generators or on-site independent power sources to ensure business continuity in times when the grid is constrained. PJM has recently approved emergency procedures that allow large facilities to switch to backup generators during extreme grid stress, further highlighting the importance of "self-supplying power". Solar installation momentum remains strong, monthly fluctuations do not hinder the overall trend At the same time, solar projects in the US continue to grow. Government data for May shows that utility-scale solar projects in the pipeline have increased to 161 gigawatts, slightly higher than the April level, despite some cancellations and completed projects, the total remains higher. BNP Paribas states that solar installations in the US are expected to exceed 40 gigawatts by 2026; the pipeline capacity implies installations reaching 58 gigawatts in 2027, surpassing the bank's forecast of 50 gigawatts. Although the installation data for May weakened month-on-month, it is considered a normal seasonal fluctuation and not a signal of weak demand. The Clean Energy Fuels Corp. sector is benefiting from two strong trends the rapid growth in electricity demand and the increasing pressure on the power grid. The market is optimistic about household batteries, solar systems, and virtual power plants becoming important components of the electricity grid. BNP Paribas agrees with this long-term direction, but believes that investors need to distinguish between long-term potential and short-term realized value, especially in the grand narrative about "dispatchable battery capacity", caution should be maintained.