Up to 30 per cent of the nation's banana crop never makes it to consumers each year because of spots and discolouring.
The Banana Growers' Council has been keen to add value to such bananas which are normally chopped up and put back onto the fields as fertiliser.
Council chief executive officer Tony Heidrich said Tuesday a grant from the Queensland Sustainable Energy Innovation Fund would allow research into whether waste bananas could viably generate electricity.
The $43,000 grant along with about $30,000 from the banana council and Ergon Energy would fund the six-month project which was likely to be conducted by University of Queensland researchers, Heidrich said.
One option would be to burn waste bananas in a furnace to tap their thermal energy but the favoured option would be "anaerobic digestion", he said.
"That's essentially just a big composting arrangement. As bacteria breaks down the banana waste, methane gas is produced and captured to drive a turbine gas engine to produce electricity."
Heidrich said one option was for banana farm packing sheds to have generators to supply their own energy needs using waste bananas.
Another option was a central facility where farmers could truck their waste bananas to be composted down to produce energy to be sold into the electricity grid.
Growers would then get a percentage of the profit based on their banana contribution, Heidrich said.
A banana council survey of the 10 largest growers in the Tully region of far north Queensland found about 20,000 tonnes of waste bananas were produced each year.