The next five years will see a rapid expansion in renewable energy capacity, according to a major new report from the International Energy Agency (IEA) that predicts total power generation from renewable sources will increase by over 40 per cent.

Released yesterday, the Medium-Term Renewable Energy Market Report 2012 estimates that by 2017 renewable energy generation globally will reach almost 6,400 terawatt hours (TWh), equivalent to around one-and-a-half times the current electricity production of the US.

The report is based on an in-depth assessment of the renewable energy markets in 15 key countries, which together account for around 80 per cent of global renewable energy generation.

It is also the first time the agency has produced a medium-term outlook for renewable energy, a move that it said was necessary due to the “dynamic and increasing role of renewable energy in the global power mix”.

The report confirms that the expansion of the sector will continue to accelerate, noting that the 1,840 TWh of new generation that the IEA expects to see added between 2011 and 2017 is almost 60 per cent higher than the 1,160 TWh added in the five years up to 2011.

It also echoes similar industry reports that have predicted much of the growth will come from emerging markets, with non-OECD countries expected to account for around two-thirds of the anticipated growth. Of the 710GW of new global renewable electricity capacity expected over the period, China is due to account for almost 40 per cent, with the US, India, Germany and Brazil also expected to entrench their positions as major markets.

“Renewable energy is expanding rapidly as technologies mature, with deployment transitioning from support-driven markets to new and potentially more competitive segments in many countries,” said IEA executive director Maria van der Hoeven at the launch of the report.

“Given the emergence of a portfolio of renewable sources as a crucial pillar of the global energy mix, market stakeholders need a clear understanding of the major drivers and barriers to renewable deployment. Based on these factors, this report forecasts global renewable development and, in so doing, provides a key benchmark for both public and private decision makers.”

Despite the encouraging medium-term outlook, the report acknowledges that the renewables sector is facing some short-term uncertainties in the form of changes to policy regimes in some OECD markets and continued difficulties accessing finance in the current economic climate.

However, overall the IEA remains optimistic the sector will continue to grow at a rapid rate, with hydropower, onshore wind, bioenergy, and solar PV expected to dominate the market over the next five years.