IHI and Mitsubishi Electric said they will participate in the $21bn Japanese space solar venture which will see a solar energy generator placed in space in the next 30 years.
A research team comprising of 16 firms including Mitsubishi Heavy Industries will take four years to devise a technology that will transmit power in the form of microwaves without the need for cables.
Institute of Energy Economics managing director Kensuke Kanekiyo said the project is significant as solar energy production in space could become a key alternative power source once fossil fuels vanish.
Japan is devising the technology for a 1GW solar plant that is equipped with 4km² of solar panels.
Solar panels in space will be able to produce energy from the sun in any weather condition, and one gigawatt will be enough to provide roughly 294,000 average Tokyo houses with power.
The biggest hurdle now is to find a cost-effective way to transport the panels into space.