Commonwealth waters off the Bass Strait in Victoria's east will be assessed for offshore wind farms.
The area off Gippsland's coast will become Australia's first "priority assessment" for offshore wind developments, the federal government says.
It was chosen due to its favourable wind conditions, investor interest, grid connection plans and Victorian government backing.
Assessments will examine the impact of offshore renewable energy infrastructure, including on marine life and birds, fishing, shipping and local communities.
"Our government understands that a strong offshore energy sector can help provide clean and affordable power to households, businesses, and industrial consumers," Assistant Energy and Emissions Reduction Minister Tim Wilson said on Tuesday.
"An offshore electricity industry could create thousands of new jobs and drive the economic growth of our regional and coastal economies."
Asked why wind farms had not been built in Australia years ago, Mr Wilson said: "I can't answer to why it wasn't done in the past."
"But what I can say is, within three weeks of being the minister responsible for this area, we passed laws to enable it to happen and now we're getting on with the job," he told ABC Radio National.
Victorian Premier Daniel Andrews said he supported the plan.
"I've got a target to massively increase the amount of wind energy that's created offshore," he told reporters on Tuesday.
The state government announced in November it was putting $40 million towards investigations into building three offshore wind farms in different near Gippsland and the Bass Coast, in separately controlled waters from the Commonwealth plan.
The initiatives could create up to 5600 jobs, bring $18 million in new investment into Victoria and power about 3.6 million homes.
A proposed 2.2GW offshore wind farm off the coast of Gippsland, Star of the South, received $19.5 million in state funding for pre-construction development.
The project will see up to 200 turbine towers driven into the seabed over about 500 square kilometres off Port Albert, Mcloughlins Beach and Woodside Beach.
