Victoria's first prototype wave power unit is ready to be installed off the state's south-west coast later this year, with its builders saying it could be the start of a "new era" for renewable energy.

If successful, the $21-million project, undertaken by BioPower Systems Pty Ltd, is expected to feed 250 kilowatts of renewable energy into the national grid.

The world's first grid-connected wave energy farm was launched in Western Australia earlier this year.

Ivor Frischknecht, chief of the Australian Renewable Energy Agency, said the Port Fairy site was in the final stages of preparation.

"The south and south-west coast ... have some of the world's best wave energy resources, and so there's a tremendous resource there that's not being used," he said.

"The technology is still in its relatively early stages, it hasn't been commercially proven, so the goal really is to develop these technologies further until they're commercially viable.

"It's the first time that such a project has been done in Victoria."

The 26-metre bioWAVE unit is designed to sway back and forth below the surface of the ocean.

The oscillating motion activates hydraulic cylinders to spin a generator, with the power transported to shore via a sub-sea cable.

Mr Frischknecht said the unit would be deployed in November, allowing researchers to monitor its capabilities over 12 months.

"The ocean is an incredibly tough environment, a wave during a storm is incredibly powerful," he said.

"This device is able to lie flat on the ground so it isn't destroyed in the process.

"There's also the interactions with salt water and the air which tends to corrode things, it's hard to deploy things and it's hard to maintain things.

"So just trying out all of those different activities and weather scenarios for the first time and monitoring it for the year is the plan."

BioPower chief Doctor Timothy Finnigan said the prototype's installation would herald a new era of renewable energy.

"These technologies have been advancing quite quietly over the past 10 years or so, slowly solving the problems - not just us, but our other colleagues around the world," he said.

"Just in the last year or two, we've started to see some successes at scale with grid-connected devices going in.

"So now it's just a matter of refining the engineering and getting the cost down, and then I think we'll be into a new era of ocean supply for renewable energy."