A flywheel system will be connected to the Irish and UK grids to help balance energy demand.
The €4 million (£3.5m) storage project will be the first installation of its kind in the UK and the largest in Europe.
It is being co-ordinated by Schwungrad Energie Limited, with Adaptive Balancing Power providing the technology and Freqcon designing and building power converters to connect it to the grid.
Flywheels work by accelerating a rotor to high speeds using electricity, storing the power within the system as rotational energy, which can be converted back to electricity when required.
They do not degrade over time like batteries, so combining the two together enables increased efficiently and reduced costs.
In the first stage of the project, the flywheel facility will be installed in Ireland – it will be capable of a peak power of 500kW and able to store 10kWh of energy.
Researchers at the University of Sheffield have also contributed and will see the system installed at their 2MW battery facility at Willenhall near Wolverhampton in the second phase of the initiative.
Norbert Hennchen, CEO of Freqcon GmbH, said: “Increasing renewable penetration is a huge challenge for grid stability worldwide and our company is at the forefront of developing innovative grid support solutions, based on our leading-edge power converters.
“We are delighted to be part of this consortium to develop and demonstrate the Flywheel-Battery Hybrid Technology.”
National Grid has announced the creation of a new dedicated Storage Working Group.