This paper describes design optimization and experiment of low-cost flywheel energy storage system (FESS) using the conventional ball bearings under low vacuum condition to compensate short-cycle electric power fluctuation caused by solar and wind power generation systems. To investigate the feasibility of the FESS for electric power compensation, specification of the FESS with 3MJ storage capacity was optimized to minimize mechanical loss including bearing loss, seal loss, and windage loss. Based on the optimization result, a prototype FESS was built and tested. As a result, the prototype FESS, which consists of flywheel rotor with 1m diameter and 0.65m thickness, angular ball bearings, ferrofluidic seal, and general purpose induction motor, achieves charging/discharging efficiency of 75.4%/77.2% in approximately ten minutes charging and discharging cycle. In addition, the prototype FESS reduces by up to 89.9% fluctuation component in the frequency range > 0.0025 Hz of the simulated solar electric power fluctuation pattern. Furthermore, loss characteristic of the prototype FESS was revealed and discussed in detail.