Britain to pay companies, hospitals to cut power demand

* National Grid (LSE: NG.L - news) seeking 900 MW of saved capacity

* Hospitals trusts, factories, offices can take part

* Britain grappling with potential power shortages (Updates with details, comment)

LONDON, Jan 26 (Reuters) - British companies, factories and hospitals are bidding to be paid by the national power provider to reduce demand at short notice if the country faces an electricity shortage in the peak winter period next year.

Britain's winter power supplies are increasingly tight due to ageing nuclear plants and tighter environmental regulations leading to coal power station closures.

Britain's National Grid said on Tuesday that the auction is aimed at saving 900 megawatts of capacity, roughly the same as a large gas-fired power plant.

National Grid has previously issued tenders for so-called "demand side response" capacity where many of the contracts were won by aggregators who link several small facilities together and offer their capacity as a larger bundle.

One of those firms, KiwiPower, whose clients include Marriot hotels, Bournemouth Water and Colchester Hospital University NHS Foundation Trust, is bidding in the auction, a spokesman said.

Alister Martin, founder of demand response firm Flexitricity, said his company will also participate in the auction.

"Capacity margins are getting tighter and demand response will be increasingly needed," he said. (Reporting by Susanna Twidale; Editing by Louise Ireland)