University of Wollongong spin-off company AquaHydrex, which is working on the research, was officially awarded the funds yesterday, under the government's Clean Technology Innovation program.

The funding is set to help AquaHydrex work with the university's Intelligent Polymer Research Institute to further research into low-cost hydrogen.

The institute's director Gordon Wallace said the funding was great news for the company, which has also attracted significant capital investment from overseas.

"Getting funding from the US is extremely rare so this is quite a coup for the Illawarra," he said.

"The investors wanted to invest in Wollongong because of the quality of the facilities and our researchers; they are of the opinion that our people are world-class so we really want to keep that entity here."

Prof Wallace said the latest funds would be used to create prototypes for water splitting.

Research scientists from the UOW-headquartered Australian Research Council Centre of Excellence for Electromaterials Science recently made a breakthrough in turning sea water into hydrogen.

The team developed a light-assisted catalyst to activate water oxidation, which is the first step in splitting water to produce hydrogen fuel.

AquaHydrex is set to use the research in its operations.

Prof Wallace said the research was a move away from the region's traditional low-cost high-volume manufacturing, in favour of next-generation electromaterials.

"The ability to translate ground-breaking research into commercial opportunities through innovative manufacturing is the future," he said.

"Wollongong is really a hub for this sort of technology.

"It's taken a lot of different skills to get [the AquaHydrex project] over the line but we have world-class facilities and researchers here, so we're well prepared to take on any challenge," Prof Wallace said.