The International Energy Agency today said it has raised its five-year growth forecast for renewables, thanks to strong policy support in key countries and sharp cost reductions.
The IEA's Medium-Term Renewable Market Report now sees renewables growing 13 per cent more between 2015 and 2021 than it did in last year's forecast, due to stronger policy backing in the United States, China, India and Mexico, IEA said in a statement.
Over the forecast period, costs are expected to drop by a quarter in solar PV and 15 per cent for onshore wind.
Renewables have surpassed coal last year to become the largest source of installed power capacity in the world, it said.
Last year marked a turning point for renewables. Led by wind and solar, renewables represented more than half the new power capacity around the world, reaching a record 153 Gigawatt (GW), 15 per cent more than the previous year. Most of these gains were driven by record-level wind additions of 66 GW and solar PV additions of 49 GW, it said.
About half a million solar panels were installed every day around the world last year. In China, which accounted for about half the wind additions and 40 per cent of all renewable capacity increases, two wind turbines were installed every hour in 2015.
"We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the center of gravity for renewable growth is moving to emerging markets," said Dr Fatih Birol, the IEA's executive director in the statement.
There are many factors behind this remarkable achievement: more competition, enhanced policy support in key markets, and technology improvements.
While climate change mitigation is a powerful driver for renewables, it is not the only one. In many countries, cutting deadly air pollution and diversifying energy supplies to improve energy security play an equally strong role in growing low-carbon energy sources, especially in emerging Asia.
Over the next five years, renewables will remain the fastest-growing source of electricity generation, with their share growing to 28 per cent in 2021 from 23 per cent in 2015.
Renewables are expected to cover more than 60 per cent of the increase in world electricity generation over the medium term, rapidly closing the gap with coal.
Generation from renewables is expected to exceed 7600 TWh by 2021 -- equivalent to the total electricity generation of the United States and the European Union put together today, it said.
IEA said further said that while 2015 was an exceptional
year, there are still grounds for caution. Policy uncertainty persists in too many countries, slowing down the pace of investments.
Rapid progress in variable renewables such as wind and solar PV is also exacerbating system integration issues in a number of markets; and the cost of financing remains a barrier in many developing countries.
And finally, progress in renewable growth in the heat and transport sectors remains slow and needs significantly stronger policy efforts, it added.
The IEA also sees a two-speed world for renewable electricity over the next five years. While Asia takes the lead in renewable growth, this only covers a portion of the region's fast-paced rise in electricity demand.
China alone is responsible for 40 per cent of global renewable power growth, but that represents only half of the country's electricity demand increase.
This is in sharp contrast with the European Union, Japan and the United States where additional renewable generation will outpace electricity demand growth between 2015 and 2021.
The IEA report identifies a number of policy and market frameworks that would boost renewable capacity growth by almost 30 per cent in the next five years, leading to an annual market of around 200 GW by 2020. This accelerated growth would put the world on a firmer path to meeting long-term climate goals.
