The IEA is "significantly increasing" its five-year growth forecast for renewables thanks to strong policy support in some countries and sharp cost reductions, it said.
The IEA’s Medium-Term Renewable Market Report has raised its forecast for renewables growth between 2015 and 2021 by 13% compared to last year’s forecast, due mostly to stronger policy backing in the United States, China, India and Mexico, it said.
Costs are expected to drop by a quarter over the same period in solar PV (photovoltaic) and 15% for onshore wind.
"Last year marked a turning point for renewables," the IEA said. "Led by wind and solar, renewables represented more than half the new power capacity around the world, reaching a record 153 Gigawatt (GW), 15% 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."
About half a million solar panels were installed every day around the world last year, the IEA said, and in China, which accounted for about half the wind additions and 40% of all renewable capacity increases, two wind turbines were installed every hour in 2015.
Fatih Birol, the IEA’s executive director said: “We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the centre of gravity for renewable growth is moving to emerging markets."
Climate change mitigation is not the only driver for renewables, the IEA said.
"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," it said.
Renewables' share of the market is expected to grow from 23% in 2015 to 28% in 2021, the IEA said.
There are still, however, grounds for caution, the agency said.
"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," the IEA said.
The next five years are likely to see a two-speed market for renewables, the IEA said.
"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% 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," it said.