Japan's New Energy and Industrial Technology Development Organization, or NEDO, and the Niedersachsen state government in northern Germany inked the deal in the state capital, Hanover, on Sunday.

3 Japanese firms, including a battery maker, and a German power company plan to take part in the 3-year project, which is set to begin next month.

They say they want to stabilize green energy supplies by saving electricity at a large storage facility when an amount well above the level of demand goes into power grids.

They say stored electricity will be used during power shortages.

Germany is sharply increasing its output of wind, solar and other forms of green energy, as the government tries to phase out nuclear power by 2022. But fluctuating output that depends on weather conditions poses a major challenge.

NEDO Chairman Kazuo Furukawa says his organization wants to introduce what it will learn in Germany to Japan and help Japanese firms start businesses in other countries.