The proposal would be the first large-scale hydrogen generation project powered by renewable energy in Victoria.

Electricty generated at the 80 megawatt solar farm would be used to produce hydrogen gas which would be exported out of the Port of Portland.

The consortium behind the project includes Glenelg Shire council, Deakin University, CSIRO, Countrywide Renewable Energy, ITM Power, Port of Portland and Ausnet Services.

Those behind the project hope to have the facility up and running within five years, but it is still yet to go through the planning approval process.

Countrywide Renewable Energy managing director Geoffrey Drucker said it was critical that they get state government support for the project.

He said while the plan was for a solar farm, it could be that it is a wind farm instead.

Mr Drucker said the viability of the project would depend on what it cost to connect to the electricity grid.

He said the project would look at using all or part of the energy produced by the solar farm to split water into hydrogen and oxygen.

The hydrogen would be either exported to Asia in ammonia, or some of it could be put into the natural gas pipeline to sure up the domestic supply.

He said they were hoping to hear back by the end of the year if the project was successful in getting $250,000 in funding for the feasibility study - much less than the $100 million the state and federal governments put into a hydrogen project using brown coal in the LaTrobe valley.

He said that project would produce three tonnes of hydrogen every year while the Heywood project would produce 10,000 tonnes.

Mr Drucker said once the project was up and running it would be worth about $30 million a year to the economy.

He said there was a growing demand from smaller Asian countries to import hydrogen to run their cars.

Glenelg mayor Anita Rank said the council was focused on diversifying its economy with renewables a key pillar for growth.

She said the council recognised that hydrogen was a key market opportunity, because of growing demand from Asian markets and the government's focus on decarbonising the economy.

"Hydrogen is a fuel of the future and our council believes we are well-placed to play an important role in this emerging global market," Cr Rank said.

"With access to the state's main power interconnector, a deep-sea port for export, secure water supply, and developable land, our shire has a strategic advantage over many regions to become Victoria's first hydrogen development, feeding Asia's thirst for this clean green energy source.

"We have a highly skilled workforce with trades which are adaptable to these emerging renewable industries.

"Together this is assisting to build our profile as a renewables leader and attract more job creating investment for our community."

There is more than $1.5 billion worth of developments in the pipeline within the shire, she said, and renewable energy was playing a prominent role such as an in-forest wind-farm and biomass energy plant.

"The Heywood Hydrogen project will set a benchmark for renewable investment and play an integral role in meeting the state's ambitious Renewable Energy Target of 50 per cent, decarbonising our economy and generating hundreds of local jobs."

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