The 170-tonne structure, which was located 150m offshore, broke free of its pylons on Friday afternoon.

Representatives from the Sydney-based company Oceanlinx immediately rushed to Port Kembla, but attempts to tow the structure to safety were hampered by heavy seas.

The barge-like structure was lodged tight against the eastern breakwater on Friday night with crews expected to make a second effort on Saturday, but by Saturday morning the structure had sunk.

Port Kembla Port Corporation CEO Dom Figliomeni said meetings with Oceanlinx representatives would be held today to discuss salvaging the unit.

"What we have been doing over the weekend is monitoring the unit to make sure it doesn't enter shipping channels," Mr Figliomeni said. "At the moment it is no danger to anyone.

"There will be investigation to determine how and why it broke free, but at this stage it is a case of early days.

"Whatever happens next our job will be to make sure that what is done is done safely."

Oceanlinx could not be contacted for comment yesterday, but on Friday a spokesman said the unit had more than double the required mooring lines in place to ensure its safe operation.

Throsby MP Jennie George said the sinking of the prototype was devastating news.

"There had been mooring problems with earlier models and the company was confident these had been ironed out," Ms George said.

"But companies and governments needs to keep persevering ... renewable energy is an important part of the energy mix in reducing carbon emissions in the future. I'm sure Oceanlinx will overcome this setback."