The barge-like prototype, one of the first of its type in the world, snapped free of pylons 150m offshore about 1.30pm and was swept into the eastern breakwall, where it was grounded last night.

Salvage crews rushed to the scene late yesterday to assess the damage, and Port Kembla pilot boats were expected to monitor the wreck closely overnight to ensure it did not pose a risk to shipping activity.

A tugboat crew tried to tow the stricken barge to safety, but their efforts were reportedly hampered by 3m waves and a mass of cables trailing through the water.

Fears were held for the safety of the barge overnight, with a heavy swell and 4m waves expected.

The rough seas are expected to ease from midday today.

Ports and Waterways Minister Paul McLeay said power to the barge was isolated and at no stage posed an electrocution risk.

Port Kembla Ports Corporation chief executive Dom Figliomeni said the barge was lodged tight, and "wasn't going anywhere".

Salvage crews are expected to try to tow the barge to a berth today.

A spokesman for the project's Sydney-based developer, Oceanlinx, said there were more than double the required mooring lines in place to ensure its safe operation.

"The unit was safely disconnected from the power grid and efforts are now underway to retrieve the unit from the breakwater."

It will be a blow to Oceanlinx, which had been keen to prove the project was commercially viable.

The wave-to-energy barge, known as the Mk3, was at the forefront of marine renewable technology and has operated for four years.

Launched at a ceremony on March 29 by Federal Environment Minister Peter Garrett, it is feeding power into the Integral Energy grid.

The mishap caused a 45-minute power outage to nearby areas.