British technology start-up Powervault has raised £700,000 through investment crowdfunding and said it will take on Tesla by installing 50,000 home energy storage systems in the UK by 2020.

The firm is partnering with solar PV companies to sell systems between 2kWh and 4 kWh with an installed price of £2,000 to £2,800. It expects to have sold 10,000 home energy storage systems in three years and 50,000 within five years, by which time it expects them to retail for less than £1000, undercutting Tesla whose units will sell for $4,000 (£2,500).

The company said it will use the new funding to redesign the product to help cut manufacturing costs by 20 per cent. The patented project includes batteries, charger, inverter, and control unit. Powervault claims it can “lower household energy bills by up to 15 per cent and save 0.3 tonnes of carbon a year from conventional generation”.

The system works by storing surplus electricity during the day and releasing it in the evening, allowing homeowners to keep their own power for when they need it, rather than exporting it to utilities and paying more to get it back.

Former energy minister Greg Barker said home energy storage can “play a key role in building a low-carbon economy, saving money for homeowners and helping the UK to cut its carbon emissions”.

“Powervault is a British company with a British designed product and it’s great to see them ready to seize the opportunities of this rapidly growing market,” he added.

Managing director Joe Warren said: “Tesla is raising awareness of home energy storage, exciting potential customers and helping to create a market. Their entry into the market demonstrates the scale of the business opportunity, with battery costs falling and up to two million UK homes forecast to have solar panels by 2020. The Powervault system has been designed specifically to meet the needs of British homeowners and is available today.”

Electric car manufacturer Tesla Motors last month unveiled its rechargeable lithium-ion energy-storing battery, Powerwall. The battery is available in a 7kWh and 10kWh form, and is designed to collect and store excess energy from roof-mounted solar panels and small-scale wind turbines.

There is also a utility-scale product, which consists of 100kWh battery blocks grouped together to create powerpacks of between 500kWh and 10MWh. Tesla said it will embark upon a trial in Ireland to develop a pipeline of multiple-battery projects, with an initial 1MW demonstration project due for deployment next year.