Renewable energy sources provided two-thirds of the new electricity generating capacity worldwide last year with solar power alone exceeding new investments in coal.
It has been predicted by the International Energy Agency's annual review of renewable energy that continued uptake will raise the share of global electricty from 24 per cent to 30 per cent by 2022.
It predicts that Denmark will be the world leader, with 70 per cent of its electricity coming from wind and solar power, while the United Kingdom, Ireland and Germany will all obtain over a quarter of their power from wind and solar.
“Variable renewables are more exposed to the risk of losing system value at increasing shares of market penetration since wholesale prices are depressed precisely when wind and solar production is abundant and demand is low.”
The IEA suggests policy makers have to deal with quite a few objectives, including, flexibility in the system and incentives to lower carbon emissions and providing the incentives for long-term investment while ensuring there is efficient short-term dispatch of electricity.
The report says prices for renewable energy generating capacity is increasingly competitive with fossil fuels without subsidies. There is a global shift towards auctioning new generating capacity and in a range of countries, including Germany, Spain, Brazil, Chile and South Africa, wind and solar projects have offered lower prices over the past year than natural gas or coal.
“Over the forecast period (2017 to 2022) onshore wind and solar photovoltaics will no longer need high direct financial incentives, but will still require a proper market framework in order to attract new investment,” it says.
The IEA predicts that Australia’s renewable generating capacity will grow upto 49 per cent over the next six years, reaching 28.4 gigawatts which is about double the growth rate in Europe!