The federal government has approved its fourth offshore wind zone off the Illawarra coast, with a reduced size, following community concerns.

It follows zones already declared off the Hunter region in NSW, Gippsland in Victoria and the Southern Ocean near Portland, also in Victoria.

Still stretching from Stanwell Park to Kiama, the footprint of the latest zone has been reduced from 1,461 kilometres to 1,022 kilometres.

The amended zone will now see the turbines positioned 20 kilometres from the coast.

It also excludes significant environmental areas including the Biologically Important Area for the Little Penguin, the Shelf Rocky Reef Key Ecological Feature and the Southern Right Whale Migration and Reproduction Area.

The scaled-down project also decreases the potential power generation, which was originally forecast to be 4.2 GW and is now forecast to be 2.9 GW.

Energy Minister Chris Bowen made the announcement in Wollongong on Saturday, where he said the project struck the right balance between protecting the marine environment and helping secure the nation's energy future.

"By moving the zone to 20 kilometres away, that achieves that outcome. On most days you won’t see the wind turbines," he said.

"Also, we have taken into account environmental concerns and shipping issues to ensure a balanced proposal."

BlueScope is set to be one of the biggest buyers of electricity produced by any wind farm built in the area.

Manufacturing general manager Dave Scott said the company backed in the project.

"It's a very important volume of renewable energy that will go towards supplying the energy that we need for decarbonisation," he said.

Mr Bowen said proposals for licence applications would need to include "strong local content plans" including steel, but he would not be setting a target or quota.

He said the project would not be ready by 2030 and was not part of the government's 2030 climate change targets.

Community divided

The prospect of hosting offshore wind farms along the Illawarra coast has sparked fierce debate within the seaside community.  

The federal government has hosted a number of community consultation sessions to allow members of the public to question departmental staff about the proposal.

One of the most common concerns raised during these sessions was how the turbines would change the look of the coastline.

Some people complained the turbines and the red lights atop them would spoil the "pristine" environment.

Residents also raised concerns over the impact the wind farms would have on the the marine environment.

Social media groups were set up to oppose the plan, with many circulating discredited claims that wind farms have a significant negative impact on whales.

Hundreds of opponents to the plan gathered on Flagstaff Hill under Wollongong's iconic lighthouse to voice their concerns about the plan.

Meanwhile, other groups have welcomed the plan believing it to be part of the solution to help transition workers from existing carbon-intensive industries, such as coal mining, into new clean jobs.

The Illawarra academic community has also given conditional backing to the proposal on the grounds the projects meet the highest environmental, social and cultural standards.

The cross disciplinary team of 17 academics said the impacts on the marine environment must be considered against the "negative impacts caused to marine ecosystems due to inaction on climate change".

Green light for energy companies

The wind zone declaration provides certainty for energy companies to begin advancing their wind farm plans.

International wind farm developers such as BlueFloat and OceanX have already begun consulting with the community.

BlueFloat was accused of jumping the gun when it lodged an application for environmental approval for its South Pacific offshore wind project, before the zone had been officially gazetted.

The Spanish company withdrew its application following backlash from the local community.

However the plan did shed light on the details of the proposed wind farms.

The 105 turbines would have a diameter of up to 275 metres, and the farm would be located 14 to 30 kilometres off the Illawarra coast.

Transmission routes were identified through three possible areas, including Port Kembla, under Lake Illawarra and through Killalea Regional Park.

Studies and approvals required

Local Cunningham MP Alison Byrnes said there was now an extensive process of studies and approvals that would be required.

Feasibility licence applications for offshore wind projects in the Illawarra zone open on Monday 17 June and close on Thursday 15 August 2024.

Construction can only begin after the feasibility stage is completed and developers have gained subsequent environmental and management plan approvals, including approval under the Environment Protection and Biodiversity Conservation Act.