Germany’s Sonnen is hot on Tesla’s heels in the small but fast-growing U.S. market for behind-the-meter batteries, mainly used to provide emergency backup power for solar-equipped homes. But like every other player in the field, Sonnen is looking for additional revenue streams to bolster its business case, like aggregating lots of smaller batteries to provide services at grid scale.

That’s the goal of Sonnen’s new partnership with Silicon Valley startup AutoGrid. On Wednesday, the two announced they’re integrating their software to “help energy project developers, utilities and other energy service providers better manage, optimize and aggregate sonnenBatterie systems and other distributed energy resources.”

Sonnen is already doing this kind of grid aggregation in Germany, through partnerships with retail energy providers and distribution utilities. It launched its U.S. residential energy storage offering last year, and now has more than 100 installation partners in 40 states. That list includes big markets like California and Hawaii and off-the-beaten-path states like Utah and North Dakota, said Olaf Lohr, Sonnen’s development director, in a Wednesday interview.

While Sonnen hasn’t disclosed figures on how many customers have bought and installed its solar-battery systems in the states it’s working in, “We’re getting to the point of critical mass,” he said.

But as the company will admit, there are cheaper ways for homeowners to get emergency backup power than a solar system and a battery. Meanwhile, maximizing your self-consumption of solar may be an economically effective use case in Germany, but it doesn’t pencil out in almost any U.S. markets, Hawaii being the possible exception.

That’s leading Sonnen, along with every other residential solar-battery contender, to look to the other side of the meter for value. While a single 5- to 10-kilowatt battery isn’t of much use on its own, blocks of them can be aggregated into larger units of energy capacity and stability that have value to utilities, grid operators or retail energy providers.

“We’re looking to add more value to justify the hardware side, and utility control becomes a more and more sought-after asset,” said Lohr. “For this market, we’re looking to add various partnerships to the mix. We know that the utility landscape is very diverse in the U.S., and we absolutely believe that partners like AutoGrid can add to our offering.”

AutoGrid has spent the past decade building a data analytics platform to manage the complexities of distributed energy resources and the resulting challenges for customers that own them. Its software has been deployed by U.S. utilities including Palo Alto’s municipal utility, Sacramento Municipal Utility District, Oklahoma Gas & Electric, Austin Energy, Florida Power & Light and Hawaiian Electric, and in Europe, it’s managing a virtual power plant with Dutch retail energy provider Eneco.

AutoGrid, which recently raised $20 million from investors including the utility consortium Energy Impact Partners, has been working for some time behind the scenes to integrate its software with Sonnen’s networking and control platform, said Shane O’Quinn, the company’s strategic accounts director.

“One of the real advantages of this partnership is that we can go to both independent customers who bought the Sonnen battery and do more with those assets, or go to utilities that want to deploy batteries to solve their specific problems,” he said.

While the opportunities for aggregated distributed energy resources are scarce at present, they’re starting to emerge in bellwether states like California, Hawaii and New York. AutoGrid recently won 1.5 megawatts of contracts under California’s Demand Response Auction Mechanism program, for instance, although it hasn’t decided whether it will use batteries for any of that commitment, O’Quinn said. 

Sonnen isn’t the only battery contender seeking residential energy storage business cases beyond backup power. Earlier this year, Tesla discontinued its 10-kilowatt-hour Powerwall model designed for backup power, to shift its focus to using batteries for solar self-consumption and for grid services through its partner, SolarCity.

Tesla also deployed its batteries with Vermont utility Green Mountain Power in a project that will pay customers to use their stored solar power to reduce load on the grid. Startup Sunverge has made utility and grid services the core of its behind-the-meter battery and solar systems, and is doing a 300-home virtual power plant project with Con Ed in New York and smaller projects in California and Kentucky.

Like Tesla, Sonnen has recently rolled out a cheaper and smaller battery designed around self-consumption and grid services instead of backup power. While it hasn’t yet announced any grid aggregation projects in the U.S., it’s working on a few behind the scenes, Lohr said.

Meanwhile, AutoGrid has been putting its data analytics platform to use hunting for value out there on the grid for Sonnen’s current and future battery fleet. “In a big service territory, you need quite a few of our devices to make a measurable impact,” Lohr said. “But because we can pinpoint it by substation, a utility could roll it out to provide capacity in certain sub-territories, or to avoid infrastructure upgrades" -- both use cases that are being considered for energy market reforms in California, New York and a few other states.