If home owners are paying then it might be less efficient for the overall economy but better for the utility company. It is often easier to find a million people willing to spend a thousand dollars than finding one person willing to spend a billion.

It's more economically optimal to convince wealthy Vermonters to house the batteries by branding it as subsidized resilience than it is to buy and maintain substations?

There’s probably a significant element of consumer batteries being so good, so easy to setup, and so cheap to buy. That it actually ends up being more economical to take this approach, than build dedicated utility scale battery storage.

With consumer units, you can reasonably expect that they’ll operate with zero maintenance and zero direct supervision for a decade plus. If the cost of those units is low enough, that reduced operational burden starts looking very attractive, especially if you want to scale up your battery capacity across your network very quickly.

Home batteries provide backup power in emergencies to the home without a substation being involved.

> That seems like the economically optimal middle ground.

It is not when we are talking about government subsidies intended to redistribute wealth from the poor to the middle class.