“To be able to make my own power and store my own power and use it when I want to is liberating,” says Krapels as he stands in his garage. “I don’t want to have to buy power from PG&E at peak rates, I want to use my own power. You see this power line going from the street to my house? I look forward to the day when I cut that wire.”

But that day has not quite arrived. The Tesla energy storage unit – it’s is a smaller version of the battery pack that powers the Model S – has sat unused since it was installed in Krapels’ garage last spring. PG&E, like other big California utilities, has refused to connect residential solar-battery storage systems to the grid unless homeowners pay a fee that can run $800 or more.

That fee fight is a fig leaf for a much bigger struggle that is unfolding over who will control the production and distribution of energy in the US – old-line monopoly utilities or a new generation of green tech companies like SolarCity and Tesla that put that power in the hands of their customers.

“Utilities are not a massive fan of people being able to disconnect from the grid,” Peter Rive, SolarCity’s co-founder and chief operations officer told The Atlantic. “But just trying to fight energy storage and kill it is going to backfire on them.”

The trend in so-called distributed generation is being driven by the plummeting price of solar panels, the growing production of advanced batteries for electric cars and government regulators who have imposed mandates on utilities to buy an increasingly percentage of the electricity they distribute from renewable sources. In October, California regulators ordered the state’s three big utilities to obtain technology to store 1,325 megawatts of electricity generated from wind, solar and other renewable but intermittent sources of energy.

That’s spawning innovation in an industry that has long seemed stuck in a technological time warp. Stem, a Silicon Valley startup, for instance, is installing $100,000 54-kilowatt-hour lithium-ion battery systems in hotels and other businesses to allow the storage of electricity when prices are low to avoid high rates utilities charge commercial customers when demand spikes. NRG Energy, meanwhile, is testing a device that will let homeowners generate their own electricity from natural gas.

But the biggest existential threat to utility hegemony may well lie with SolarCity and Tesla. (The two companies have a combined market cap of $18.8 billion; PG&E’s is $18.3 billion.) In 2010, the California Energy Commission awarded SolarCity $1.8 million to study the feasibility of integrating its solar panels with batteries made by Tesla. (Elon Musk, Tesla’s chief executive, serves as SolarCity’s chairman and is the cousin of the company’s founders.)

SolarCity spent three years developing the software that controls the interaction between a photovoltaic array, the Tesla battery and the grid. Rive says the company has offerered the solar storage system to select customers – more than 300 so far – who either want backup power in the event of an electricity outage, or who like Krapels, want to pull the plug on their utility. According to the California Public Utilities Commission, as of July 1, there were 319 applications to hook up rooftop solar arrays with storage systems that could a total of 10 megawatts of electricity.