A MANDATORY renewable energy target is set to stay, with $15.5 million provided to the regulator over five years to administer the scheme.

The funding for the Office of the Renewable Energy will be welcomed by industry players, but is bound to disappoint other suppliers who have pressed for changes to the target.

During the election campaign, Labor promised to increase the mandatory renewable energy target to 45,000 gigawatt hours, together with the approximately 15,000GWh of existing renewable capacity.

This target is designed to have 20per cent of Australia's electricity supply - about 60,000GWh - generated from renewable sources by 2020.

According to Australian Bureau of Resources Economics figures quoted by Labor during the election campaign last year, this is equivalent to the electricity used in Australia's 7.5 million homes.

The national renewable energy target is designed to guarantee a market for renewable energy.

The Government says this will increase deployment of renewable electricity generation capacity, particularly in regional areas, and reduce the intensity of greenhouse gas emissions from Australia's electricity sector.

As the scale of the deployment of renewable energy technologies increases over the years, it is expected that their relative cost will fall, particularly when a price is put on carbon as part of intiatives to fight climate change.

The budget is awash with funds for domestic energy and water saving schemes, with $300million being made available over the next five years to provide low-interest "green loans" of up to $10,000 to help families install solar, and water- and energy-efficient products.

The Government has invested $252.2million over five years to encourage household use of solar and heat-pump hot water systems in eligible homes.

A further $7.9million over four years is provided for the phasing-out of old-style inefficient hot water systems.

The Government is also investing $150million in encouraging the installation of solar power systems, providing rebates of $8000 per installation for 6000 households in 2008-09. The rebate, however, will be subject to a $100,000 household annual taxable income means test.

An additional $150million over five years has been provided in a Low Emissions Plan for Renters to provide rebates to accelerate the installation of insulation in up to 300,000 rental homes.

And there is $14million over four years to help families identify the most energy-efficient and cost-effective appliances for their homes through a new 10-star appliance rating system, as well as $3million over three years to establish an online One Stop Green Shop to link efficiency programs.