The project is expected to be completed in 24 months
South Africa has selected UK power company Globeleq to build a standalone battery energy storage system, which will be the largest on the continent when completed.
A battery energy storage system stores excess electrical energy generated during peak production times.
It then supplies the stored energy to power grids when there is high demand or low energy generation.
The 153 MW/612 MWh-capacity project will be situated on five hectares (12 acres) in the Northern Cape province and will be linked to the grid of state-run power company Eskom.
Globeleq expects it to be completed in 24 months, for 5.7bn rand ($305m; £242m).
"Electricity storage is going to be key in helping South Africa meet its considerable industrial and domestic demand for energy," Globeleq CEO Mike Scholey said in a statement on Friday.
The project is part of South Africa's efforts to address its power crisis, which is partly caused by insufficient electricity generation.
In recent years, power cuts, referred to as load-shedding, have caused much frustration, with homes going without power for up to 16 hours.
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