Renewables accounted for two-thirds of new power added to world’s grids last year, says International Energy Agency

Solar power was the fastest-growing source of new energy worldwide last year, outstripping the growth in all other forms of power generation for the first time and leading experts to hail a “new era”.

Renewable energy accounted for two-thirds of new power added to the world’s grids in 2016, the International Energy Agency said, but the group found solar was the technology that shone brightest.

New solar capacity even overtook the net growth in coal, previously the biggest new source of power generation. The shift was driven by falling prices and government policies, particularly in China, which accounted for almost half the solar panels installed.

The Paris-based IEA predicted that solar would dominate future growth, with global capacity in five years’ time expected to be greater than the current combined total power capacity of India and Japan.

Dr Fatih Birol, the executive director of the IEA, said: “What we are witnessing is the birth of a new era in solar photovoltaics [PV]. We expect that solar PV capacity growth will be higher than any other renewable technology up to 2022.”

The authority, which is funded by 28 member governments, admitted it had previously underestimated the speed at which green energy was growing.

The amount of renewable energy capacity forecast globally in 2022 has been revised upwards on last year’s forecast, driven by the IEA expecting a third more solar in China and India.

Facebook Twitter Pinterest Wind turbines and solar panels in Yancheng, Jiangsu province of China. The China is the world’s fastest-growing market for renewables. Photograph: VCG via Getty Images

While China dominates the expansion of renewables, the US is still the second fastest-growing market despite Donald Trump’s pledge to revive coal and the uncertainties he has brought at a federal level.

Paolo Frankl, head of the renewable energy division at the IEA, said that solar and wind subsidies and other fundamentals meant the president’s impact would probably be limited.

However, that could change if there were reforms that retrospectively hit the subsidies or if the US International Trade Commission imposes tariffs on imports of Chinese solar panels. “There is a risk, but at the moment our forecast remains strong,” said Frankl.

India is set for a solar boom over the next five years, as bottlenecks such as integrating solar farms with the grid are overcome. The country’s renewable energy capacity is forecast to double by 2022, overtaking the EU on growth.

The picture for the UK is a “mixed message,” said Frankl. The IEA has revised downward its forecast for the amount of green energy to be built in the UK between 2017 and 2022, with offshore windfarms expected to account for most of the growth.

Despite the recent opening of the UK’s first subsidy-free solar farm, the prospects for British solar are fairly gloomy: the amount of solar forecast to be installed by 2022 is a fifth of the amount installed over the last five years.

The report found that renewables are becoming increasingly comparable to fossil fuels on price, with wind and solar projects setting record low prices in government auctions.

“Renewables may well become even cheaper than fossil fuel alternatives [over the next five years]. However, be careful because this does not automatically mean they are competitive and investment will flow. That depends on the risk of investment and whether remuneration flows make a project bankable or not,” said Frankl.

The growth in renewable power will be twice as large as gas and coal combined over the next five years, the IEA said. While that will take renewables’ share of electricity generation from 24% last year to 30% in 2022, coal will still be the biggest source of power.

The increasing scale of wind and solar power, and their intermittent nature at a local level, means that integrating them with power grids has become critical, the IEA said. Countries will need to bring forward policies that make grids more flexible, such as batteries and managing demand at peak times, it suggested.

One energy expert said that the IEA report was, if anything, underestimating the speed of renewables’ growth and the impact of them becoming so cheap.

Tim Buckley, director of energy finance studies at Australia-based analysts IEEFA, said: “2016 was another record high year of renewable installs and unexpectedly large renewable energy cost deflation, again highlighting the IEA’s continued underestimation of both these two trends driving the increasingly global market transformation.”