Reducing Australia's renewable energy target will not lead to a fall in power prices, one of the country's leading industry groups has warned.

In a move that will pressure Prime Minister Tony Abbott to retain Australia's goal of producing at least 20 per cent of all electricity from renewable sources by 2020, the Australian Industry Group has urged the government not to abolish or drastically cut the target.

AIG, which represents more than 60,000 businesses, said the RET had lowered wholesale power prices and there would be little benefit to consumers if the target was lowered.

The comments are in contrast to statements Mr Abbott made last year that the RET was causing electricity price rises at a time when Australia ought to be ''an affordable energy superpower''.

There are growing fears that the government plans to scale back the target after Australia's flagship clean energy development agency - the Australian Renewable Energy Agency - was axed in last week's budget.