Britain’s cheapest “virtual battery” could be created by hoisting and dropping 12,000-tonne weights – half the weight of the Statue of Liberty – down disused mine shafts, according to Imperial College London.

The surprising new source of “gravity energy” is being developed by Gravitricity, an Edinburgh-based startup, which hopes to use Britain’s old mines to make better use of clean electricity at half the cost of lithium-ion batteries.

Gravitricity said its system effectively stores energy by using electric winches to hoist the weights to the top of the shaft when there is plenty of renewable energy available, then dropping the weights hundreds of metres down vertical shafts to generate electricity when needed.

The scheme mimics hydropower projects which have played a key role in helping to balance the electricity grid, including the Dinorwig project in Wales.

Charlie Blair, Gravitricity’s managing director, said: “The beauty of this is that this can be done multiple times a day for many years, without any loss of performance. This makes it very competitive against other forms of energy storage – including lithium-ion batteries.”

A full-scale project would drop 24 weights totalling 12,000 tonnes to a depth of 800 metres to produce enough electricity to power 63,000 homes for more than an hour.

By carefully controlling the winches Gravitricity said it could extend this period by allowing the weights to fall at a slower rate and release electricity over a longer period.

The company is currently in discussion with mine owners in the UK, Finland, Poland, the Czech Republic and South Africa, where mine shafts could be more than 2,000 metres deep.

Oliver Schmidt, the lead author of Imperial’s report, said Gravitricity’s model is the most price competitive energy storage option because it has a relatively low upfront cost and a potential lifespan of more than 25 years.

The report found that electricity released by a typical 10MW lithium-ion battery project would cost $367 (£283) per megawatt-hour over its lifetime compared with a cost of $171 (£132)/MWh for electricity from a Gravitricity project.

Schmidt said: “I don’t expect Gravitricity to displace all lithium batteries on grids, but it certainly looks like a compelling proposition.”

The system was first developed by Gravitricity’s founder, Peter Fraenkel, who also invented the world’s first full-scale tidal energy turbines. The design was bought by the German industrial firm Siemens.

• This article was amended on 22 October 2019. An incorrect reference to the Dinorwig project “operating since the mid-1970s” was removed. Dinorwig came online in 1984.