Renewables’ slice of the energy pie may not be the biggest piece, but it is growing—enough so that the International Energy Agency (IEA) has upped its forecast for renewables growth.

Stronger policies supporting cleaner energy in China, India, Mexico and the U.S. are fueling the move as many countries push toward goals of reducing emissions and improving air quality. The IEA sees renewables growing by 13% more between 2015 and 2021 than it did in the 2015 forecast.

During this time period, costs for solar photovoltaic (PV) cells are expected to fall by one-quarter while costs for onshore wind energy are expected to fall by 15%, according to the IEA, which provided some interesting statistics:

  • About 500,000 solar panels were installed daily across the world in 2015;
  • In 2015 two wind turbines were installed every hour in China, which accounted for about 40% of all renewable capacity increases; and
  • Wind and solar accounted for more than half of the world’s new power capacity in 2015, hitting 153 gigawatts—a record.

Oil and gas companies have also jumped into the renewables action, including Royal Dutch Shell Plc, Statoil ASA, Total and DONG Energy, which is even rethinking its future in the oil and gas business.

Denmark-based DONG said it is managing its oil and gas business for cash to fund investments in renewable energy including offshore wind, bioenergy and thermal power. The company’s wind farm business generated 42% of its EBITDA in the first half of 2016, overtaking oil and gas, Reuters reported.

The IEA believes renewables will maintain its position as the fastest-growing source of electricity generation, with its share rising to 28% in 2021 from 23% 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,” Dr. Fatih Birol, the IEA’s executive director, said in a 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,” IEA added. “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.”

Despite the increased uptake of renewable energy sources, IEA said there are still “grounds for caution.” For starters, policy uncertainty has slowed the pace of investments in many counties. Other concerns include:

  • System integration caused by the rapid progress in renewables such as wind and solar PV;
  • Costs, although falling, still remain a barrier in some parts of the work; and
  • Stronger policies are needed to hasten the progress of renewable growth in the heat and transport sectors, IEA said.

“I am pleased to see that last year was one of records for renewables and that our projections for growth over the next five years are more optimistic,” Birol said. “However, even these higher expectations remain modest compared with the huge untapped potential of renewables. The IEA will be working with governments around the world to maximize the deployment of renewables in coming years.”

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