The $42.5 million investment injection will put Hysata on the path to gigawatt-scale manufacturing of the equipment and grow the team in NSW, the company said on Tuesday.

The funding will be used to hire more staff and develop a pilot manufacturing plant for an electrolyser the company says will process the world's lowest-cost green hydrogen.

Liquid hydrogen is yet to be proven as a commercially viable alternative fuel.

But Paul Barrett, CEO of Hysata, said the equipment operates at 95 per cent system efficiency, delivering a giant leap in performance and cost over incumbent technologies, which typically operate at 75 per cent or less.

"Our mission is to redefine the economics of green hydrogen production through our innovative proprietary electrolyser technology," Mr Barrett said.

Kiko Ventures in the United Kingdom, Denmark's Vestas Ventures, Australia's superannuation fund Hostplus, steel company BlueScope and venture capital firm IP Group Australia are backing the "hero fuel" to one day decarbonise heavy industry.

BlueScope's venture capital arm said it was keen to invest in Australian technologies coming out of local communities, with Hysata born in the Illawarra.

Australia's green bank chipped in $10 million, building on its initial $750,000 in seed money for Hysata and the kernel of an idea researched at the University of Wollongong.

Clean Energy Finance Corporation CEO Ian Learmonth said Hysata is set to be a "major player" in the global electrolyser industry and Australia's clean technology sector.

Green hydrogen could be a vital alternative fuel for getting to net zero carbon emissions, particularly for heavy emitting industries such as steelmaking, heavy transport and chemical refineries.

Australian Associated Press