The International Energy Agency (IEA) reported that in 2015, for the first time, renewable energy passed coal as the world’s biggest source of new power-generating capacity.
The IEA, established as a watchdog of the industry in the wake of the 1973 oil crisis, found that renewable energy generating capacity is increasing faster than it projected. Based on existing policies, the IEA updated its forecasts to show 825GW of new renewable capacity will be added globally from 2015-21, 13% more than it projected just last year.
Although the IEA’s stated goal is to provide impartial advice, it’s been criticized for publishing overly conservative estimates that have failed to predict the growth of wind and solar power. Bloomberg New Energy Finance provides graphs as shown below to illustrate the IEA’s previous underestimations of solar and wind power growth.
According to a spokesman for the industry, this year’s forecasts seek to reflect the growing number of countries adopting climate change policies, as well as the global deal to curb carbon emissions and global warming agreed in Paris Climate Agreement.
The IEA expects the share of renewables in total power generation to rise to 28% from 21%. The rise would be driven by government policies to curb global warming and reduce air pollution, as well as falling prices of solar panels and wind turbines. The IEA expects the United States to pass the EU and become the second-biggest market for renewables after China in the next few years, thanks to an extension of federal tax credits to wind and solar producers.
Because electricity demand in rich countries is falling, more renewable power are expected to drive other sources of electricity out of the market. As shown below in a chart from Economist.com, electricity-generation growth from renewables is expected to displace that from conventional sources. In the U.S. or the EU, conventional sources would mean fossil fuels while for Japan it would refer primarily to nuclear power.