Electricity distributor Powerco has announced a multi-million dollar trial of a back-up system to support power supply to the coastal town of Whangamatā.

The company will this year install a grid-scale battery back-up system and a large scale generator and bespoke network switching system designed to support electricity supply to the Whangamata CBD in the event of a power cut.

Powerco chief executive Nigel Barbour said the Whangamatā Central system would allow the company to test grid scale battery technology on its network that supports the people and businesses of Whangamatā.

"Our expectation is that, once commissioned, Whangamatā Central will significantly reduce the level of disruption to Whangamatā CBD properties of any unplanned powercuts on the 33,000 volt line from Wahī and provide opportunities for further network innovation," he said.

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General manager of asset management and network transformation Ryno Verster said the primary benefit to customers in the area would be as a fast acting back-up power supply.

"Whangamatā is supplied by a single 33,000 volt line running through some rugged terrain from Waihi and historically it has experienced damage from severe weather, tree felling and a number of other asset failures," he said.

"When damage occurs to that line all power is cut to more than 5700 properties."

Verster expected the system would be able to rapidly restore electricity supply to about 1000 properties in the Whangamata CBD once fully commissioned.

It would also continue to supply customers while staff located and repaired the damage to the network, he said.

Verster said the battery was capable of supplying the CBD area during peak business hours for a period of one to two hours and, when paired with the generator, could maintain that supply indefinitely as long as the diesel tank was kept fuelled.

"We are acutely aware of the impact power cuts have on Whangamata and particularly the economic impact to businesses during the holiday season and this project is expected to make a significant difference," he said.

The line between Waihī and Whangamatā had recently undergone an extensive refurbishment, Verster said.

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However, due to the rugged terrain and the exposure to severe weather, he said the line was subject to a high level of risk.

"Having a system like this in place is a first for Powerco which we believe will provide a step change in performance for the Whangamatā CBD," he said.

"We understand that many of the businesses in Whangamatā generate 80 to 90 per cent of their income over the holiday season and so if we can minimise the risk and duration of power cuts, we minimise any adverse economic impact to the area."

Powerco would not reveal the exact cost of the project due to commercial sensitivity, but Verster confirmed it was "several million dollars".

Details of which properties in the CBD would be supplied by the back-up system can be found on Powerco's website.

The project was expected to be complete prior to Christmas 2019.