Mercury Energy launched New Zealand's first grid-scale battery storage facility in Auckland today.

Using Tesla's Powerpack battery, the direct grid-connected battery is part of an ambitious project to test the direct integration of battery energy storage with New Zealand's electricity grid.

Fraser Whineray, Mercury Energy chief executive, said battery storage has the potential to support New Zealand's renewable electricity supply.

"Battery storage is a fast-developing technology with potential to support our country's existing globally-envied renewable electricity supply," Whineray said.

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"Mercury's mission is energy freedom for New Zealand and everyone who lives here, and this means offering new ways that sustainable energy is provided. Advances in battery technology are also fundamental to electrification of cars and trucks; they're all part of the same energy ecosystem."

A direct grid-connected battery is a large-scale battery able to take, store and return energy directly to the national grid, making it possible to provide energy when use is high or supply is disrupted.

The battery is located next door to the national grid's "main highway" in to Auckland.

The energy company hopes to learn more about how battery storage can more efficiently and flexibly use current generation capability to meet consumers' demand peaks through gathering information about trading energy storage, and the relationship of stored electricity to the renewable hydro and geothermal electricity sources in its generation portfolio.

All of this will ultimately contribute to the security of supply for Auckland's homes and businesses.

John Clarke, general manager operations at Transpower, said Transpower sees battery storage as playing an increasingly important role in providing a reliable supply of electricity in New Zealand.

"We see battery storage as playing an increasingly important role in providing a reliable supply of electricity in New Zealand, as we increase our reliance on wind and solar to generate our electricity," Clarke said.

"We look forward to continuing to work with Mercury throughout the trial and gather key learnings to enable the transition to New Zealand's sustainable energy future."

Mercury has invested nearly $3 million in the project.

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