A bipartisan deal on a pared-back renewable energy target could unlock Australia's "massive" clean power potential.

The lengthy political impasse which has hamstrung the sector has finally broken after the federal government retreated from plans to impose two-yearly reviews of progress towards the 2020 target.

The concession, signed off by Prime Minister Tony Abbott, paves the way to slash the target from its legislated 41,000 gigawatt hours to 33,000GWh.  In return, Labor agreed to the Clean Energy Regulator monitoring the scheme with annual statements on its costs and progress.

Both sides have agreed to further discussions on what should be in the reports.  Industry Minister Ian Macfarlane expects legislation to be before the parliament in the next three weeks.

“The reporting system is really all we wanted,” he told reporters in Melbourne.

“What we wanted were credible facts and figures provided to the government of the day that indicate where the scheme is.”

Labor and the clean energy sector refused to back a deal that included legislated reviews, concerned long-term investors would be put off by short-term audits.

The government has been trying to slash the target after a review found 41,000GWh could overreach the policy goal of 20 per cent of all power coming from renewables by 2020.

The resulting political uncertainty froze clean energy investment, cost jobs and rendered the target impossible to meet.

It also risked penalties that would be passed on to consumers.

Big business, including the Australian Chamber of Commerce and Industry, has been pushing for a deal amid concerns companies would be burdened with exorbitant power bills.

Labor’s environment spokesman Mark Butler blamed Mr Abbott’s “reckless attack” for transforming Australia’s sector from an attractive investment option to an industry on the brink of collapse.

“This has been a very, very, sorry state of affairs for the past 12 months,” he told reporters in Melbourne.

The renewables peak body, the Clean Energy Council, believes the deal will lift a huge weight from the shoulders of almost 20,000 people employed in the sector.

While not happy with a pared-back scheme, the council has been lobbying for a compromise to restore certainty to the sector and kickstart investment.

“This has been a challenging process for all concerned, and we are obviously disappointed with a reduction of the target,” chief executive Kane Thornton said.

“It will also help to unlock Australia’s massive renewable energy potential.”

Labor will look at boosting the 2020 target if elected to government at the next election, likely in 2016.

The Australian Solar Council welcomed that commitment, saying the coalition had done everything it could to shut down the industry.

“They are the most anti-renewable government in the world today,” CEO John Grimes said.

The government is standing firm on the inclusion of wood waste fuel as a renewable source and will present legislation in that form to parliament.

Labor will “strenuously” oppose the move, but the government is confident it can secure sufficient Senate crossbench support.

By Elise Scott