Energy agency predicts $1.6T in renewable investments through 2020

The world will invest $1.6 trillion in renewable energy capacity through 2020, when renewable sources will account for more than a quarter of electricity generation, the International Energy Agency said Thursday.

The overall increase will come despite a slowdown in the growth of investments in solar, wind, hydropower and other energy sources. Spending will average $230 billion a year through 2020, down from $250 billion in 2013, largely due to falling costs of the technology.

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The Paris-based IEA predicted in its Thursday report that investments in renewable energy will suffer even more if policies aren’t made clearer to favor them.

“Policy uncertainty remains a key challenge to renewable deployment,” the organization said. “Unanticipated changes to incentive schemes represent a risk that investors cannot manage, and can lead to elevated financing costs and boom-and-bust development patterns.”

As examples of policy problems, the IEA cited China, where there is limited spending on electricity networks and limited financing. In Europe, investors aren’t certain about renewable policies past 2020, or about development of an electrical grid across the continent.

“Renewables are a necessary part of energy security,” IEA Executive Director Maria van der Hoeven said in a statement.

“Many renewables no longer need high incentive levels. Rather, given their capital-intensive nature, renewables require a market context that assures a reasonable and predictable return for investors.”