In a windy town in Hokkaido, an experiment is about to begin with a battery designed to transform the way electricity is supplied and at the same time boost Prime Minister Shinzo Abe’s economic rescue plan.

The Ministry of Economy, Trade and Industry is investing ¥20 billion in a Sumitomo Electric Industries Ltd. device to be used by Hokkaido Electric Power Co. to store excess solar and wind power, stabilizing flows to consumers.

Since the Great East Japan Earthquake in 2011, the government has redoubled work to upgrade power systems and spur exports that can revitalize the economy.

The Sumitomo device is meant to give Japan the kind of market leadership it had in the 1970s with cheap calculators made by Casio Computer Co. and this century with Toyota Motor Corp.’s fuel-saving hybrid cars.

“It’s great timing to make inroads into Europe and the U.S. and to supply the system in Hokkaido toward commercialization,” said Keisuke Murakami, the METI official in charge of the project.

The battery, which uses the metal vanadium to store electrical energy in electrolyte tanks, has been researched from Australia to China and promises to handle the sort of large power surpluses that can develop on a transmission grid.

Hokkaido was picked because it’s isolated from the mainland’s electricity network and has open land ideal for arrays of solar panels and wind turbines. Success would benefit Sharp Corp. and Softbank Corp., which are among the investors that have sought to build solar projects with four times the capacity Hokkaido’s grid can handle. Installation is set for completion by March 2015.

Energy storage is one of the technologies Abe and Japan’s previous government have been working on to modernize the grid, whose structure has been fixed since World War II.

Utilities including Tokyo Electric Power Co. and Kansai Electric Power Co. have experimented with energy storage. In the U.S., Electric Transmission Texas and PG&E Corp. are among the companies that have experience with the technology.

Aside from cost, one of the biggest obstacles is the potential for battery systems to overheat and cause fires. Last August, a 15-megawatt lead-acid battery backup system for a wind farm in Hawaii caught fire and destroyed its warehouse, forcing a temporary closure of First Wind Holdings Inc.’s 30-megawatt wind farm.

Problems associated with more prolific lithium-ion batteries have grounded Boeing Co.’s Dreamliner jets and led to the bankruptcy of U.S. government-backed A123 Systems Inc.

In September 2011, a fire started at a 2-megawatt storage system developed by NGK Insulators Ltd. and production of sodium-sulfur batteries was suspended. In May, NGK announced it signed an agreement to supply a battery system with the capacity of as much as 490 megawatt-hours to Terna SpA of Italy.

Trials in Hokkaido are aimed at answering how to integrate bursts of power on sunny, windy days into a grid designed to handle constant output from generators driven mainly by nuclear reactors and fossil fuels typically run day and night.

“The project will enable gathering data and integrating more clean energy onto the grid,” said Takahiko Date, a senior researcher at the ICT innovation department of Mitsui Global Strategic Studies Institute in Tokyo. “Once batteries’ performance is proven, it becomes easier to deploy them abroad.”

Not everyone is convinced the battery project will fix the grid. “This may be a good pilot project to improve the technology, but it won’t solve the problems Hokkaido is facing,” said Ali Izadi-Najafabadi, an analyst for Bloomberg New Energy Finance. “It doesn’t help much with the issue of Hokkaido’s overall electricity demand being low,” where renewable generation is increasing and there’s not enough capacity to transfer electricity to the mainland, he said.

Alternatives to batteries have been working for years for utility-scale power storage. Pumped hydroelectric power is the most common, with more than 127 gigawatts of capacity worldwide, according to the U.S. Electric Power Research Institute. Those pump water into a reservoir where it can be released later to drive hydroelectric turbines.

The Hokkaido project gives the government and Sumitomo a chance to showcase the vanadium redox flow technology to utilities around the globe that need to integrate renewables into the grid. It relies on almost three decades of research by Sumitomo on rechargeable batteries.

With a capacity of 60 megawatt-hours, the battery will be installed at Hokkaido Electric’s Minami Hayakita substation in the town of Abira, according to a joint statement from Sumitomo and the utility. One megawatt is enough to power about 333 homes in Japan.

METI said there is an increasing need for storage in Europe for wind power, and the system on trial in Hokkaido shows promise.

“That is why Sumitomo is betting on a technology it once gave up,” METI official Murakami said.