By 2016, the world will get more of its electricity from renewables — hydro, wind, solar, etc. — than from natural gas, according to the International Energy Agency’s (IEA) “Medium-Term Renewable Energy Market Report.” But in the Americas, particularly the United States, natural gas is still in the lead.

Despite challenging economics, renewable power is expected to increase by 40% in the next five years. Renewables are now the fastest-growing power generation sector and will make up almost a quarter of the global power mix by 2018, up from an estimated 20% in 2011.

However, renewables faced strong competition from other energy sources in some markets, for instance, natural gas in the United States, IEA said. In fact, in the Americas, new renewable generation is expected to be second to fossil fuels (largely natural gas-fueled), but still accounts for more than 40% of the increase in gross generation, according to IEA.

“As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation,” said IEA Executive Director Maria van der Hoeven.

“…Many renewables no longer require high economic incentives. 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.”

In absolute terms, global renewable generation in 2012 — at 4,860 TWh — exceeded the total estimated electricity consumption of China.

Two main factors are driving the positive outlook for renewable power generation. First, investment and deployment are accelerating in emerging markets, where renewables help to address fast-rising electricity demand, energy diversification needs and local pollution concerns while contributing to climate change mitigation. Led by China, non-OECD countries are expected to account for two-thirds of the global increase in renewable power generation between now and 2018. Such rapid deployment is expected to more than compensate for slower growth and smooth out volatility in other areas, notably Europe and the United States, IEA said.

Second, in addition to the well-established competitiveness of hydropower, geothermal and bioenergy, renewables are becoming cost-competitive in a wider set of circumstances, IEA said. For example, wind competes well with new fossil-fuel power plants in several markets, including Brazil, Turkey and New Zealand. Solar is attractive in markets with high peak prices for electricity, for instance, those resulting from oil-fired generation. Decentralized solar photovoltaic generation costs can be lower than retail electricity prices in a number of countries.

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