The bungalows of Oxspring may look an unlikely testing ground for a new technology billed as a way to help renewable power, stymie energy price rises and aid the local power grid.

But later this month, dozens of homes in this South Yorkshire village will have a home battery installed as part of a £250,000 trial to see if they can make solar power more valuable to homeowners and less painful for grid managers.

Smaller than the high-profile Powerwalls introduced to the UK by Elon Musk’s Tesla last year, the British-engineered batteries will be fitted for free in 30 homes with solar panels on their roofs and 10 without.

The project is a response to what until recently would have seemed an improbable challenge for the UK: too much solar power. There are now 875,000 homes with solar photovoltaic panels, and that is beginning to pose issues for network operators. In Oxspring, a community energy company found it could only install solar panels at two in three homes because of constraints on the amount of power that can be pushed into the grid.

Energy storage company Moixa and the local network operator, Northern Powergrid, hope their pilot will “timeshift” solar for use at peak times and show storage can reduce network bottlenecks and cut out the need for costly upgrades, which would be passed on to energy bill-payers.

“In northern Europe, solar produces the most energy when you don’t need it [at midday]. The amount of solar in the UK is meaningful now, and that’s translating to challenges [to grids] and costs to customers,” said Simon Daniel, chief executive of Moixa, who sees better storage as the solution.

The company has around 600 batteries in homes across the UK, which it aggregates to act like one big battery, effectively a virtual power station. The Oxspring householders will either benefit from using more of their solar power – the electricity is more valuable if consumed in the house rather than exported to the grid – while the non-solar homes will get a cheque of £50-£75 each year from Moixa for aiding the local network.

The Moixa battery. Photograph: Moixa

The trial near Barnsley is just one sign of a growing energy storage market in Britain. Companies such as Tesla and London-based Powervault do not publish sales numbers, but Germany’s Sonnen says it has sold hundreds of storage systems in the UK. The total installed is thought to be in the four figures.

Most players have so far targeted householders hoping to increase the financial gain from their solar panels. But the introduction of time-of-day energy tariffs, enabled by smart meters, mean householders could potentially store electricity when it’s cheap, for use later when it’s pricier. Combined with the advent of rebates for “grid services” to connected batteries such as the Oxspring ones, they could dramatically widen home batteries’ appeal.

Industry group the Electricity Storage Network describes 2017 as a “watershed” year for the technology. Sonnen said it was receiving a surge of customer enquiries, and predicted the UK market would take off this year.

The Powervault energy storage system at home. Photograph: Powervault/PA

Powervault, which says it wants to make home batteries as commonplace as dishwashers and washing machines, started a £625,000 trial in south-east England last month. The project with UK Power Networks involves batteries in 60 homes.

“The purpose is to enable us to harness more of the solar energy that’s generated during the day, when demand for energy is low, and release it onto the network at the morning and evening peaks,” said a spokesman for UK Power Networks, the UK’s biggest network operator.

“National Grid spends about £1bn a year balancing demand and supply of energy. Currently they pay that money largely to big power stations but in the future we’ll move to a scenario where it also goes to a collective of batteries,” said Joe Warren, MD of Powervault, which began selling home batteries in 2014.

He said Tesla’s arrival last year raised consumer awareness and argued that the market is big enough to sustain several companies: “There’s definitely room for a British energy storage player.”

However, its US rival is upping the ante with a new, higher capacity version of its battery, which is in such demand that anyone buying one today can only get it in March at the earliest. Tesla, which earlier this month switched on the first sections of its battery-making Gigafactory in Nevada, begins installing the first of the new generation of Powerwall 2s in UK homes in February.