Tesla’s (TSLA) energy business is expanding in Texas, partnering with solar and home energy infrastructure provider Sunrun (RUN) to help homeowners build “virtual power plants” and make money in the process.

In a statement, Sunrun said it was partnering with Tesla subsidiary Tesla Electric, a retail electricity provider in Texas, in order to support the energy grid in Texas via Tesla Powerwall battery owners.

Tesla Electric is the company’s retail electricity provider that gives owners of Tesla Powerwalls the option to let Tesla manage and adjust an owner’s home energy system, either at home or through dispensing energy back to the grid. With the Tesla Electric service, Powerwall owners can optimize their earnings by selling back to the grid and sharing electricity with the community, in this case the Texas energy grid.

Customers will be compensated in the form of yearly payments, Sunrun said, currently calculated at $400 per Powerwall for 2024.

Sunrun stock jumped over 10% on news of the partnership.

Sunrun said the partnership with Tesla has enrolled more than 150 Sunrun customers in an “aggregated power program” and will scale up using stored solar energy from at-home batteries to augment electricity reserves on the grid during peak consumption.

Sunrun uses other energy storage providers as well, but the company noted that Tesla Electric is a preferred provider for the service due to its rate structure for customers and “virtual power plant” functionality, where clusters of Powerwall owners are aggregated virtually via software and batteries to create a power source capable of augmenting a larger electrical grid.

“Texas grid has already experienced a traumatic spring and summer due to weather vulnerabilities and we know the state also needs more power to meet soaring demand on a daily basis,” said Sunrun CEO Mary Powell in a statement, noting that Texans are now increasingly adding batteries to their solar installations, like the ones Sunrun installs.

Texas was slammed by Hurricane Beryl only a few weeks back, knocking out power to millions of consumers connected to Texas’s troubled electrical grid, managed by local regulator Electric Reliability Council of Texas (ERCOT). Beryl’s destruction comes three years after a winter storm devastated Texas’s grid, knocking out power for weeks during a bitterly cold winter.

Since then, ERCOT has been experimenting with ways to augment its grid’s resiliency, and distributed energy strategies like virtual power plants have been implemented.

Added Sunrun’s Powell, “On-site energy storage not only provides homeowners peace of mind with outage protection but also enables them to participate in programs like these by contributing to solutions that better the lives of those in their communities.”

Tesla did not comment on news of the deal, but the company has noted the growth in its energy business. In its latest second quarter earnings report, the company said it deployed a record amount of battery storage, which was more than double Q1’s total.

Wall Street analysts, including Morgan Stanley’s Adam Jonas, are bullish on Tesla Energy, one of the company’s biggest growth drivers.

Jonas dubbed Tesla’s Q2 energy deployment storage figure a “show stealer” in a recent research report, noting the 9.4 GWh deployed was double the firm’s forecast.

“We believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom,” Jonas said.

Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on X and on Instagram.

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