Solar and wind energy projects worth up to $18 billion are being paralysed by uncertainty over the government's commitment to the industry, as speculation grows that the clean energy target for 2020 will be cut back.
With the carbon tax potentially to be scrapped when the new Senate sits after July, Prime Minister Tony Abbott and other senior Coalition figures have increasingly set their sights on the mandated target for renewable energy, blaming it for forcing up power prices.
New wind farm projects are often stalled at state level and NSW has also delayed new guidelines for wind farms for two years, adding to industry uncertainty.
The offices of NSW Premier Barry O'Farrell and Mr Abbott denied Mr O'Farrell had told cabinet colleagues last week that the release of wind farms guidelines was not a priority because Canberra would cut the renewable energy target "to 10 per cent".
Clean energy sources such as wind and hydro already supply more than 10 per cent of the nation's energy on occasion. The Abbott government is likely to set the terms of the renewable energy target review and who will be running it within weeks.
''We support renewable energy but I accept that the way the system works at the moment is putting upward pressure on power prices," Mr Abbott said last week in Brisbane.
He planned to ask the biennial review of the renewable energy target to "do what it can to bear down" on electricity prices "in ways which are consistent with the commitments that we've given to business''.
The existing target is an absolute amount - 41 terawatt hours of electricity from large-scale renewable energy by 2020 - which may either by reduced or delayed, with big implications for the profitability of generators.
Hugh Saddler, principal consultant with energy advisers Pitt & Sherry, estimated large wind and hydro energy plants supplied 13.3 terawatt hours of electricity in 2012, about a third of the 2020 goal.
Infigen Energy managing director Miles George said the "constant threat of change to the legislation" from industry reviews had all but frozen new investment in the sector.
"The effect on our business, and for the industry in general, is paralysis," he said.
Infigen had secured approval for new wind farms worth $2 billion in NSW, Victoria, South Australia and Western Australia but these were stalled by the uncertainty, he said.
Clean Energy Council chief executive David Green said any major reduction or change to the renewable energy target would have a significant impact on the $10 billion worth of investment already poured into the industry, with another $18 billion likely if the current goal remained.
"Reducing the renewable energy target means that Australia would have to rely more heavily on high-cost gas, which a report by the Australian Industry Group suggests will triple in price this decade, forcing up power prices for consumers and industry," Mr Green said.
According to state authorities, the target now adds between 1.5 and 2 per cent to annual power bills. But that increase was "wholly or more than offset" by the impact on wholesale power prices, Infigen's Mr George said.
With Heath Aston