Prime Minister Tony Abbott has signalled his government is preparing to slash Australia's renewable energy target citing ''changed circumstances'' and a desire to be an ''affordable energy superpower''.

Speaking in Canberra, Mr Abbott said the government supported the ''sensible'' use of renewable energy, but added the target was causing significant electricity price rises.

The target ensures that 20 per cent of Australia's electricity comes from renewable energy sources such as wind, solar and hydro by 2020. It was first established by the Howard government, but was later beefed up by the Rudd government.

The Coalition has vowed to review the target next year. Some large companies, such as Origin Energy, have lobbied for the scheme to be reduced because falling energy demand means the target will likely be overshot and instead mean 27 per cent of Australian electricity will come from renewable sources by decade's end.