Mercury is spending $2 million on developing on a battery directly connected to the national grid that could help avert power cuts.

The Auckland-based energy company will use power from the national grid to store in the 1MW lithium ion battery that will be traded on both the wholesale and reserve markets, a New Zealand first.

Some batteries would be the size of a 40ft (12m) long container, take two hours to power up when energy is cheap and two hours to discharge.

Mercury's Southdown research centre is big enough to locate batteries capable of storing more than 100MW, making them a likely feature of future electricity supply and capable of flattening out daily peak demands for electricity from the grid.

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Nine companies have submitted tenders for the project which is scheduled to go live later next year.

Mercury chief executive Fraser Whineray said the high voltage grid-connected battery storage had the potential to be a ''game-changer'' for Auckland.

''This could make a real difference to the way power is supplied to homes and businesses over the coming decades particularly as populations grow,'' he said.

Many New Zealand companies were looking at the opportunities from the development of battery technology.

''Mercury's strategic, R and D-focused project takes this to the next level, gaining scale experience in energy trading between battery and grid, and delivering competitive outcomes for our customers."

Mercury's general manager of hydro-wholesale, Phil Gibson, said the investment in the trial was small by the scale of Mercury's operations but would allow it to learn about the technology.

''This will last 10 to 20 years and we're watching the cost curves of batteries and seeing when the business case might be applicable.''

Lines company Vector is also trialling batteries in Auckland.