Offshore wind turbines could be operating off the Hunter coast within the next decade after the federal government said the region had "world-class" wind energy potential.
Public consultation on the project, which industry estimates would create hundreds of clean energy jobs, is expected to commence in coming months.
The government listed the Hunter on Friday as one of six areas with world-class offshore wind energy potential in Australia.
Climate Change and Energy Minister Chris Bowen also announced that public consultation for a proposed wind project in Bass Strait off Gippsland area would begin immediately.
It will be followed by the Hunter project then the Illawarra, Portland, Northern Tasmania and Perth Bunbury.
Offshore wind, also known as variable baseload power, can help with energy security and resilience due to its power capacity and availability at times when solar power and onshore wind are not available.
In addition to the viability of the wind resource, sites are selected based on their strategic proximity to existing energy generation facilities, industrial hubs with strong connections to existing transmission networks and proximity to major export ports.
"It's a momentous day for the industry," Oceanex Energy chief executive Andy Evans said.
The company is one of seven parties that has proposed offshore wind projects off the Hunter coast.
It estimates the project would create 300 full time jobs over the project's 30 year lifespan.
It hopes to have the necessary planning approvals and funding in place for the Novocastrian project so it can begin the four year construction phase in 2028.
The City of Newcastle and the University of Newcastle have formally endorsed the project.
"Leaving aside Gippsland, the best sites in Australia are easily Hunter then Illawarra, Mr Evans said.
"Gippsland is great but it doesn't have all of the manufacturing and steel making, power generation, marine logistics skills of a deepwater port as well as hydrogen coming on board."
Estimates for the job opportunities of an offshore wind industry in Australia range from 3000-8000 jobs annually.
"The world's climate emergency is Australia's regional jobs opportunity and offshore wind is just one example," Mr Bowen said.
"Unlocking the offshore wind industry is an exciting new chapter for Australia and we want to build a platform of community collaboration and support around it."
"We have some of the best wind resources in the world - just one rotation of one offshore wind turbine provides as much energy as an average rooftop solar installation generates in one day.
"This new industry will provide opportunities to reduce emissions and fast track job and economic development opportunities for regional Australia particularly in clean energy generation and manufacturing.
"Many other countries have been successfully harvesting offshore wind energy for years, and now is the time for Australia to start the journey to firmly establish this reliable and significant form of renewable energy."
Hunter Workers secretary Leigh Shears said the establishment of the offshore wind industry was essential for the future prosperity of the Hunter region.
"We warmly welcome prospects for this investment and the opportunities it will generate for Hunter workers," he said.
"We hope to work closely with the Labor government to ensure local workers are appropriately consulted and prioritised."
Climate Council senior researcher and energy expert Tim Baxter described the government's announcement as an exciting and critical step in realising a cleaner, cheaper, healthier future that is free of coal and gas.
"Just like the new Climate Bill and yesterday's historic proposed rejection of the Queensland coal mine - this announcement is a symbol of Australia's climate shift. This is exactly the kind of urgent action we need to reduce pollution this decade," he said.
"While Europe takes great advantage of its offshore wind resources, foot dragging by the previous federal government means Australia - with world class offshore wind resources - still has no industry at all.
"Taking advantage of offshore wind brings many advantages to the grid, further improving the reliability of our power supply. Australians can see the importance of this in the current energy crisis which has been exacerbated by the fleet of failing coal and gas generators."
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