Auckland University public affairs officer Bill Williams said fourth year students Jeff Mison, Angela Lee and Joshua Wong plan to recycle the bottles into sand and sell it for commercial uses in forms of cement, mortar and plaster.
Sand has been an essential ingredient in glass-making for hundreds of years.
The trio are working with the Waiheke Waste Resource Trust, which originally wanted the students to investigate how to reduce the cost of shipping the bottles.
The island's 8000 permanent residents produce 100 tonnes of bottles per month, at a cost of $100 per tonne for shipping, Mr Williams said.
The project was part of a new community service initiative launched yesterday at the university's engineering faculty.
Three other groups of students at the university were involved in similar initiatives.