Australia's largest wind tower producer is sacking 100 staff after the Federal Government revealed plans to scale back the Renewable Energy Target (RET).

Keppel Prince Engineering, based in Portland in south-west Victoria, told workers this morning it would be mothballing its tower fabrication division and consolidating other parts of its business.

The Government announced yesterday it wanted to see the RET reduced 41,000 gigawatt hours to around 26,000 gigawatt hours.

Keppel's general manager Steve Garner said while the decision to axe jobs was not a direct response to that announcement, the uncertainty surrounding the decision had hurt the sector.

"The announcement will effectively kill off the industry," he said.

"The way this Government is going on they've been doing nothing but try to destroy the renewable energy sector for the amount of time they've been in Parliament," he said.

The Coalition had been reviewing the RET which requires that 20 per cent of the nation's power come from renewable sources by 2020.

Keppel Prince job cuts Approximately 100 positions will be axed

Approximately 100 positions will be axed Tower fabrication division to be mothballed

Tower fabrication division to be mothballed Warrnambool crane operations to be closed

Warrnambool crane operations to be closed Some management administrative roles cut

That review, headed by businessman Dick Warburton, presented a range of options to the Government including recommendations to scale back or wind up the RET completely over time.

Mr Garner said the length of time it took to complete the review and the ongoing uncertainty over the Government's plans for the target made investing in the sector difficult.

"Here we are 10 months on and we don't have a decision about where the Renewable Energy Target's going to be," he said.

"That's completely stalled $15 billion worth of investment in wind farms throughout the nation."

Mr Garner said the company it did not have wind tower work beyond November.

State Member for Western Victoria Gayle Tierney said the job losses were devastating for the region.

"My thoughts are with all Keppel Prince employees and their families. This is a traumatic time and the last thing that Portland needed," Ms Tierney said.

"I find this situation totally reprehensible as it was preventable if the Liberal Government didn't use renewable energy and renewable energy jobs as their plaything.

"We need a Government that is attuned to the needs of our economy and provides sustainable local jobs for local people."

Victorian Premier Denis Napthine blamed wind power companies that used overseas towers for the loss of the jobs in his electorate.

"What we're seeing is the wind energy industry failing to use local jobs and local producers like Keppel Prince," he said.

"Fancy building 60 wind towers in Ballarat and importing the wind towers from overseas rather than using locally produced towers."

The director of the Clean Energy Council, Russell Marsh, rejected the Premier's claims.

"I mean to date, something like 80 per cent of the wind towers and steel that are used in Australian wind farms have come from Australian steel and from Australian tower manufacturers like Keppel Prince," he said.

The RET was initially set up by the Howard government to encourage investment in electricity produced from sources such as solar and wind, but the Rudd government expanded the RET scheme to mandate 20 per cent of all electricity would come from renewable sources by 2020.