In fading light and just a stone's throw from the most terrifying scenes during Japan's worst nuclear accident, engineers resumed their race against time to defeat the next big threat: thousands of tonnes of irradiated water.

If all goes to plan, by next March Fukushima Daiichi's four damaged reactors will be surrounded by an underground frozen wall that will be a barrier between highly toxic water used to cool melted fuel inside reactor basements and clean groundwater flowing in from surrounding hills.

Up to 400 tonnes of groundwater that flows into the basements each day must be pumped out, stored and treated – and on-site storage is edging closer to capacity. Decommissioning the plant will be impossible until its operator, Tokyo Electric Power [Tepco] addresses the water crisis.

Last month workers from Tepco and the construction firm Kajima Corp began inserting 1,550 pipes 33 metres vertically into the ground to form a rectangular cordon around the reactors. Coolant set at -30C will be fed into the pipes, eventually freezing the surrounding earth to create an impermeable barrier.

"We started work a month ago and have installed more than 100 pipes, so it is all going according to plan to meet our deadline," Tadafumi Asamura, a Kajima manager who is supervising the ice wall construction, said as workers braved rain, humidity and radiation to bore holes in the ground outside reactor No 4, scene of one of three hydrogen explosions at the plant in the early days of the crisis.

But sealing off the four reactors – three of which melted down in the March 2011 disaster – is costly and not without risks. The 32bn-yen (£185m) wall will be built with technology that has never been used on such a large scale.

"I'm not convinced the freeze wall is the best option," Dale Klein, former head of the US Nuclear Regulatory Commission and a senior adviser to Tepco, recently told Kyodo News. "What I'm concerned about is unintended consequences. Where does that water go and what are the consequences of that? I think they need more testing and more analysis."

The 1,500-metre wall will stay in use until 2020, using enough electricity every year to power 13,000 households, according to officials.

Over the next eight months, 360 workers from Tepco and Kajima will work in rotating shifts of up to four hours a day, with each shift beginning in the early evening to combat heat exhaustion. Each worker is wrapped in hazardous materials suits and full-face masks, along with tungsten-lined rubber torso bibs for added protection against radiation.

Tepco's record of mishaps in the three years since Fukushima Daiichi suffered a triple meltdown suggests the wall project will not be trouble free. The firm has had problems freezing irradiated water – using the same method being used to build the underground wall – that has accumulated in underground trenches, raising concerns that the ice technology is flawed.

"There have been challenges over the past three years, but major improvements too," Fukushima Daiichi's manager, Akira Ono, told the Guardian and other visiting journalists this week. "We know it's not 100% yet and we're working to make it better. What is important is that we recognise the problems and take action to solve them."

Ono said Tepco had safely removed 1,200 of the 1,500 nuclear fuel assemblies that were being stored in a pool in reactor No 4 when the tsunami smashed into the plant, knocking out back-up power supplies and sending three of its reactors into meltdown. The rest would be removed, on schedule, by the end of the year, he added.

But attempts to address the build-up of contaminated water in reactor basements suffered a serious setback last year when storage tanks sprung leaks.

The plant's water-treatment facility, which can remove all radioactive nuclides except tritium, has been suspended several times owing to malfunctions. All three lines of the system are running again, but only on a trial basis, according to Tepco spokesman Yuichi Nagano. "We hope to have treated all the contaminated water stored on site by next March," he said.

Ono said the wall would work in tandem with a recently completed bypass that reroutes clean groundwater directly into the Pacific, and underground wells.

Last month, Japan's nuclear regulators voiced concern at the failure to freeze the water in the trenches. Ono conceded attempts had been unsuccessful, but said it did not mean the ice-wall technology was faulty. "The water inside the trenches isn't freezing properly because it is circulating inside at higher speeds [than the groundwater]," he said. "I'm confident we'll be able to freeze the trench water by next March."

As it enters a critical phase of the Fukushima Daiichi clean-up, Tepco is contending with low morale among employees, about 3,000 of whom have quit or taken early retirement since the March 2011 disaster.

Many have turned their back on nuclear power to take better-paid, less stressful jobs in other parts of the energy industry.

Ono recognised the difficulties facing workers, but dismissed suggestions that there would not be enough people to decommission the plant. "In a sense decommissioning a nuclear power plant is a backward-looking operation, but we face so many unprecedented challenges that I think of it as forward-looking," he said, citing the deployment of newly designed robots to locate and remove melted nuclear fuel. "That's the kind of thing that motivates our engineers to keep going."

He insisted that the 6,000 men from Tepco and its huge network of contractors and subcontractors now working at Fukushima Daiichi would see the world's most complex nuclear cleanup through to the end. "Obviously, it's difficult to say for sure how many years it's going to take … at the moment we're talking about 30 or 40 years," he said. "But I know that our employees have a strong sense of mission – the Tepco spirit, if you like – that is being passed down from one generation of workers to the next."