The energy produced by new wind project will meet up to three per cent of the island's energy needs. (CBC)

The federal government will provide $12 million for a wind power project on Prince Edward Island, Prime Minister Stephen Harper announced in North Cape, P.E.I., Friday.

The money will go toward a wind energy research and development park and storage system on the province's north coast.

It will study the production, operation, storage and installation of wind technology.

Harper said the energy produced at the site will meet up to three per cent of the province's electricity needs, which translates roughly as enough energy to fuel 4,000 households.

The Wind Energy Institute of Canada will use the money to build a nine- to 10-megawatt wind turbine cluster consisting of five turbines. It will also build an electricity storage system that will be the first of its kind in P.E.I.

One of the major drawbacks of wind power is that the energy from it is not easily stored. The research will look at what kinds of batteries work best for storing wind-generated energy.

Harper called the research "the next big step."

The project will be built near an existing wind facility in North Cape and funded through the government's Clean Energy Fund.

Harper was given a tour of the area by Federal Fisheries Minister Gail Shea, who is the local MP, and Premier Robert Ghiz.

The prime minister said the funding the project was part of his government's plan to become less reliant on fossil fuels.

"Ultimately, a transition to alternative fuels is inevitable, and I'm convinced that the way to handle it is to develop new technologies in an orderly way, not in a crisis," he said.

The five turbines will be erected next summer, after which the battery research will begin.