Cutting RET won't help consumers: Ai Group

A leading industry lobby group is urging the Abbott government not to reduce Australia's renewable energy target, warning the move wouldn't lead to lower household power bills.

The government has commissioned a review of the bipartisan RET scheme, which mandates that 20 per cent of all electricity comes from renewable sources by 2020.

The review has been asked to consider whether it's still appropriate to deliver 41,000 gigawatt hours of renewable power by the end of the decade, and what impact that's having on electricity prices.

Critics have suggested the RET is responsible for unnecessarily driving up power bills, and called for the target to be watered down or scrapped altogether.

But the Australian Industry Group has questioned the merit of watering down the scheme, saying the extra energy generated by wind farms and solar panels has driven down wholesale energy prices.

"If there is a genuine risk of missing the target and incurring penalties, the target should be trimmed," Ai Group boss Innes Willox said in a statement on Tuesday.

"But on the current evidence base, cutting the target below this point would not advance energy users' interests."

In its submission to the RET review, the group also warned that axing the scheme would increase sovereign risk or trigger major compensation action.

Mr Willox said there were improvements to be made to the scheme, particularly around the level of subsidies on offer to the clean energy sector.

The Climate Institute's submission claimed that weakening the target wasn't the solution for excess energy supply, and would only undermine confidence in the electricity sector.

The review panel will provide its report to Prime Minister Tony Abbott midway through this year.