The distribution network operator, which delivers electricity to more than eight million homes and businesses across London, the South East and East of England, claims it will be the first ever project of its kind in the capital.
The equipment will be installed in approximately 40 homes across the London Borough of Barnet.
UKPN says although solar panels and batteries have previously enabled people to store self-made, surplus energy, the new system will allow them to both save and earn money from their batteries.
When demand is high, UKPN will be able to instruct the batteries, through energy aggregator Powervault, to discharge in unison and relieve pressure on the electricity network, at which point a payment will be sent to householders.
It suggests this could help reduce the need for new network infrastructure, such as building substations and laying cables, in order to keep down electricity distribution costs.
Barry Hatton, Director of Asset Management at UKPN, said: “Our plans to create the capital’s first ever ‘virtual power station’ are paving the way for a smart, flexible electricity network that puts people in charge of their energy use.”