Work on the multi-million pound development is expected to begin later this year and is scheduled to be completed by the autumn of 2002.
It will bring together scientists from the University's Centre for Sustainable Technologies at Jordanstown and the Northern Ireland Centre for Energy Research at the Coleraine campus.
Funding for the project, which will give Northern Ireland cutting edge research into 'green' power, will come from the UK-based Science Research Investment Fund.
The development was unveiled by Professor Brian Norton, the UU's Dean of Engineering and Built Environment, at a reception in Belfast's City Hall at the end of the opening session of a two day renewable energy conference attended by more than 100 experts from around Europe.
Sir Reg Empey, Minister for Enterprise Trade and Investment welcomed the project which he said would make Northern Ireland the envy of the rest of Europe.
Sir Reg also announced that his Department is to make £600,000 worth of grants available over the next three years to support the development of small scale demonstration and full commercial, locally owned generators working with renewable energy sources such as wind, photovoltaics (similar to solar panels), energy crops and small hydro schemes.
He is also to release a consultative paper next week to seek views on how Northern Ireland can increase its use of renewable energy. The province currently produces 1.5% of its electricity from renewable sources and the DETI has set a target of doubling that by the year 2005.
Sir Reg revealed that Northern Ireland consumers are leading the way in the UK in the use of 'green' power. Some 3,000 consumers have signed up to use electricity generated from renewable sources - compared to only 25,000 'green' power consumers in the whole of the UK. The Minister said this showed the commitment of Northern Ireland consumers to renewable energy. "Our consumers already pay a high price for conventionally generated electricity, yet have agreed to pay a premium on top of that to guarantee that their supplies from renewable sources", he added.