Mitsubishi, Japan's biggest trading company, will transfer needed technology, educate local staff and shoulder the project's total cost, estimated at 1.5 billion yen ($13.7 million), a company spokesman said.
The tiny but wealthy nation on Borneo island is aiming to introduce renewable power sources to diversify its primary energy supply, with hurdles yet to be cleared including the grid system and know-how on installation and maintenance.
"Brunei heavily relies on oil and natural gas, both natural resources with deposit limits," the Mitsubishi spokesman said. "As a business partner with a history of almost 40 years, we'd like to do something for the economy's sustainable growth."
In a joint venture with the Brunei government and Royal Dutch Shell, Mitsubishi has since 1972 produced and shipped natural gas mainly to Japan.
It is the sole such project, and Japan relies on Brunei for about 10 percent of its annual natural gas imports.
Mitsubishi said the test solar plant will be fitted with a range of solar panel types and produce data to gauge the most suitable one under for the region's climate.
The plant will be located at an abandoned thermal power plant in Seria, about 70 km (44 miles) west of the capital of Bandar Seri Begawan. Its capacity of 1.2 megawatts would be enough to power some 400 homes.