Electricity generation from renewable energy sources will increase 40% in the next five years and will make up a quarter of the global power mix by 2018, according to a new report by the International Energy Agency (IEA).
In its second annual 'Medium-Term Renewable Energy Market Report' (MTRMR), the IEA has predicted that power generation from hydro, wind, solar and other renewable sources worldwide will exceed that of natural gas and be twice that of nuclear by 2016.
The share of non-hydro sources such as wind, solar, bioenergy and geothermal in total power generation is expected to double, reaching 8% by 2018, up from 4% in 2011 and just 2% in 2006.
IEA executive director Maria van der Hoeven said as their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation.
"This is good news for a global energy system that needs to become cleaner and more diversified, but it should not be an excuse for government complacency, especially among OECD countries," Hoeven said.
IEA noted that even as the role of renewables increases across all sectors, renewable development is becoming more complex and faces challenges, especially in the policy arena.
The agency said in several European countries with stagnating economies and energy demand, debate about the costs of renewable support policies is mounting.
Hoeven warned that 'policy uncertainty is public enemy number one' for investors.
"Many renewables no longer require high-economic incentives," Hoeven added. "But they do still need long-term policies that provide a predictable and reliable market and regulatory framework compatible with societal goals.
"And worldwide subsidies for fossil fuels remain six times higher than economic incentives for renewables."
IEA said two main factors are driving the positive outlook for renewable power generation, which are investment and deployment in emerging markets, as well as the cost-competitiveness.
Led by China, non-Organisation for Economic Co-operation and Development (OECD) countries are expected to account for two-thirds of the global increase in renewable power generation between now and 2018.
Image: The power generation from hydro, wind, solar and other renewable sources will exceed that of natural gas and nuclear by 2016. Photo: courtesy of FreeDigitalPhotos.net.