The facility is operated by Hokkaido Electric Power Co. The battery will be able to store 60 megawatt-hours of electricity.
Officials said 20 billion yen ($204 million) in taxpayer money will be sunk into the project.
The storage battery will allow Hokkaido Electric to procure 10 percent more electricity through natural energy sources.
Under a feed-in tariff system implemented last July, electric power companies are obliged to purchase electricity generated by natural energy sources. That led to an increase in the construction of solar power generation facilities.
The battery is expected to lead to greater use of natural energy sources because it will store electricity generated when the sun is out, while power can be released under cloudy conditions.
If the supply of electricity to households and other users can be stabilized, the volume of electricity generated through natural energy sources will rise.
The installation is set for completion by the end of fiscal 2014.