The BBC reports that France will get to host the project to build a 10bn-euro ($12.16bn) fusion reactor, in the face of strong competition from Japan.
The International Thermonuclear Experimental Reactor (Iter) will be the most expensive joint scientific project after the International Space Station.
The Iter programme was held up for over 18 months as parties tried to broker a deal between the two rivals.
Fusion taps energy from reactions like those that heat the Sun.
Fusion is seen as a cleaner approach to power production than nuclear fission and fossil fuels.
Prof Sir Chris Llewellyn Smith, director of UK Atomic Energy Authority's (UKAEA) Culham division, said the decision was "wonderful news".
"Rapid construction of Iter will be a major step in the development of fusion as a potential large-scale source of electricity that will not contribute to climate change," he added.
In terms of the physics and huge amounts of energy involved, the Iter project would be akin to building a star on Earth.
It would be the first fusion device to produce thermal energy at the level of conventional electricity-producing power stations, and would pave the way for the first prototype commercial power station.
In a fusion reaction, energy is produced when light atoms - the hydrogen isotopes deuterium and tritium - are fused together to form heavier atoms.
Plasma has some of the qualities of a gas, but conducts electricity and responds to magnetism.
Unlike oil, gas and coal, the sources of deuterium are almost infinite, for it is present in seawater. Tritium is a man-made isotope derived by irradiating the plentiful element lithium in the fusion vessel.
To use controlled fusion reactions on Earth as an energy source, it is necessary to heat a gas to temperatures exceeding 100 million Celsius - many times hotter than the centre of the Sun.
The technical requirements to do this, which scientists have spent decades developing, are immense. But the rewards, if Iter can be made to work successfully, are extremely attractive.
One kilogram of fusion fuel would produce the same amount of energy as 10,000,000 kg of fossil fuel.
Fusion does produce radioactive waste but not the volumes of long-term high-level radiotoxic materials that have so burdened fission.
Fusion energy may be only a few decades away or it may be many more. Regardless it is important for us to make serious investments into potential solutions to the energy challenges facing us. These include fusion, wind power, solar energy, improving battery technology for automotive applications, wave power, energy efficiency, smart grids, and micropower generation.
Full BBC Article
BBC - How Fusion Energy Works
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