Investments in new clean-energy capacity will total $1.61 trillion through 2020 even as the expansion of renewables is expected to slow, the International Energy Agency said.

Funding for power generation from wind, solar radiation and biomass will average $230 billion a year from $250 billion in 2013 as technology costs fall and growth loses pace, the Paris- based adviser to 29 nations said today in its annual renewables report.

Renewables will account for about 26 percent of global electricity generation by the end of this decade from about 22 percent now. The expansion will slow over the next five years unless lawmakers provide clear conditions that enable investments, the IEA said.

“Policy uncertainty remains a key challenge to renewable deployment,” according to the “Medium-Term Renewable Energy Market Report.” “Unanticipated changes to incentive schemes represent a risk that investors cannot manage, and can lead to elevated financing costs and boom-and-bust development patterns.”

Constraints in China, the biggest emitter of greenhouse gases and also the largest solar-energy market, include a lack of spending on the electricity networks and the cost and availability of financing, the IEA said. Investors in the European Union face uncertainty over renewables policy post-2020 and the installation of a pan-European grid to ease the integration of clean-energy plants, it said.

Slower growth means there may not be enough renewable capacity to meet global climate-protection objectives, the IEA said. Politicians worried about the cost of deploying renewables should think again, said IEA Executive Director Maria van der Hoeven.

“Renewables are a necessary part of energy security,” she said in a statement. “Many renewables no longer need high incentive levels. Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors.”

Source - Bloomberg

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