The research, released by CSIRO Futures on Wednesday, also warned the nation had a small "window of opportunity" to take advantage of its head start before other countries recognised the market's potential.
The findings come weeks after the release of the National Hydrogen Strategy 2024, which outlined a target to produce 15 million tonnes of green hydrogen in Australia annually by 2050.
The CSIRO research, called the Hydrogen Electrolyser Manufacturing report, investigated opportunities to produce the technology used to create renewable hydrogen.
Demand for renewable hydrogen, also known as green hydrogen, is rising around the world. (Bianca De Marchi/AAP PHOTOS)
Electrolysers are specialised equipment that use renewable electricity to split water into hydrogen and oxygen, creating hydrogen without producing carbon emissions.
Demand for renewable hydrogen, also known as green hydrogen, was rising worldwide, the study found, as nations sought to cut their greenhouse gas emissions.
"The rapid increase in scale, demand from electrolysis projects around the world, and the space for new entrants create a clear window of opportunity for countries like Australia to develop their electrolyser supply chains," the report said.
Australia could create $1.7 billion in revenue and 3974 jobs by 2050 if it manufactured hydrogen electrolysers, CSIRO Hydrogen Industry Mission leader Dr Patrick Hartley said.
"There is an economic prize out there for jobs and revenue," he said.
"We have strengths in Australia around advanced manufacturing in other sectors like aerospace, defence, medical, tech, and some of those technologies are transferable into this area.
"Of course, we also have the potential to use a lot of our own raw materials too."
Installing the equipment could also create another 1000 jobs, the analysis found, and an additional $1.2 billion.
Producing the technology used to create renewable hydrogen could unlock thousands of jobs. (Lukas Coch/AAP PHOTOS)
Australian equipment could also support existing plans, with 87 hydrogen projects involving electrolysis already announced locally, most of them in Queensland and Western Australia.
"I would love to see Australian-made electrolysers used in Australian projects," Dr Hartley told AAP.
"We have a pipeline of hydrogen projects in Australia that could provide a domestic market for electrolysis and that would be a great outcome."
Demand for renewable hydrogen is likely to grow, with the International Energy Agency calling for almost one-third (32.8 per cent) of hydrogen to be created by electrolysis by 2030 - up from just 0.1 per cent in 2022.
Australia has the second-highest number of renewable hydrogen projects under way, led by India, but the manufacturing industry needed to move swiftly to seize the opportunity, CSIRO Futures energy lead Vivek Srinivasan said.
"By leveraging Australia's renewable energy advantages and innovative (research and development) capabilities, Australia can become a player in this rapidly emerging sector," he said.
"We must act quickly while the opportunity is available to us."
Renewable hydrogen is likely to be used in fields such as heavy freight and long-distance road transport, energy storage, and ammonia production once widely available, the report found.
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