Australian technology that could revolutionise the world timber industry is poised for a commercial breakthrough in NSW.

Microwave technology developed by the Cooperative Research Centre for Wood Innovations in Victoria offers enormous productivity gains for timber mills.

It slashes the time it takes to convert a green log to dried finished boards from months to days.

Australian Solar Timbers (AST) will use the technology at its established hardwood timber mill in Kempsey, about 400 kilometres north of Sydney.

This will be the first commercial microwave plant in the world, and will be built with the help of a Federal Government grant.

Company owner Douglas Head said 30 per cent of his plant's output would use the technology. AST is a specialist flooring manufacturer.

Dr Head said it was crucial that the locally developed technology should be first used in Australia.

"Where it is first built is where the industry for manufacturing the equipment will eventuate," he said. "There is potential for substantial export income. There is huge interest in Asia, particularly from furniture manufacturers."

The capital costs of a microwave plant are estimated to be no more than the capital cost of the large capacity kiln that would be required for conventional processing.

The chief executive of the CRC for Wood Innovations, Peter Vinden, said at present, sawn hardwood timber required a long, slow drying process that took several months.

"However, after microwave treatment, green sawn boards can be dried in one-tenth of the usual time," he said. "A conventional drying process of two to four months could be shortened to six to 10 days."

A market assessment by timber technology firm MTech estimates a medium-sized sawmill can boost its annual drying throughput by almost 40 per cent, to 9000 cubic metres, just by using the microwave processing technology.

Professor Vinden said the reduced processing time also greatly increased throughput capacity, allowed sawmillers to respond more rapidly to market demands, and reduced holding and handling costs due to shorter processing times for timber stocks.

"It is also a green technology. Because it yields better-quality wood, it will increase utilisation of plantation timbers, so helping the growth of that sector," he said.

Professor Vinden said microwave processing could also increase the yield from each log processed, by reducing defects that occur during drying.