‘What gets measured, gets managed,’ is an long-standing cliché of business, but its truth is often self-evident when it comes to governance. In planning energy policies, regulators and businesses and even voters must have access to the right kind of data before they can even see which problems are most pressing and which solutions most viable.

The International Energy Agency’s new five-year forecast for the renewable energy sector joins the fuel-specific reports covered by its widely read oil, natural gas and coal mid-term reports. Those fossil fuels need little introduction, and in the developed countries covered by IEA and its parent organization – the OECD – production, processing, use and reserves of the traditional energy complex is very advanced and taken as fact.

By comparison, the renewable energy sector has had a transparency problem (if hardly a visibility problem). The hectic growth of wind, solar, biomass and new additions to hydropower created the impression that the use of renewable energy would soon be a dominating force, but the combination of a lingering recession, limited appetite for greenhouse gas caps and the historic advantage of fossil fuels all held back growth after a spate of government support.

“Ultimately, the competitiveness of renewable generation depends on local conditions, cost structures, resources and the prices of alternatives, making global comparisons difficult,” IEA said in introducing its forecast for renewable fuels for the 2011-2017 period. “Yet renewable sources are clearly becoming more economically attractive in an increasing number of countries and circumstances.”

The IEA has put itself clearly on the side of action on limiting emissions and expanding the use of renewable energy in previous statements under a high-profile new chairwoman Maria van der Hoeven.

‘The Unique Challenge’

The group has its work cut out for it in attempting to gauge and predict the growth of renewable energy over the next five years; it admits that the largest new sources of growth in the renewable sector will come from countries outside its purview. China alone will account for roughly 40% of new global renewable energy capacity over the next five years, while both Latin America as a whole and Brazil individually will account for a larger percentage of global renewable energy growth than European countries in the OECD.

A new announcement that wind turbine manufacturer Vestas will provide the equipment for a 50 MW plant in Mexico (building on earlier orders) underlines the scale of the opportunity in Latin America, with financiers noting the commitment of governments to broader electricity access as a driver of renewable energy in the region earlier this year.

Hydropower makes up the majority of new renewable energy projects, but onshore wind and solar capacity are also expected to continue accelerating despite the financial, political and commercial challenges each sector faces. Total onshore wind capacity will double to 460 GW in 2017, IEA says. Solar will grow at a faster pace, but remain a smaller contributor of total power supply than onshore wind.

“The solar PV manufacturing sector should experience several years of consolidation in the face of weak profit margins,” IEA said. “Given past boom and bust cycles in several countries, the degree of dynamic approach to policy support will remain a key forecast variable.”

The even bigger variable for renewable energy over the next five years could be the unintended consequences of macroeconomic policy decisions and new regulations impacting banks. “Looking ahead, increased macroeconomic risk and tighter bank capital requirements amid uncertainty about policy support in some areas could constrain funds from traditional sources – European bank project financing and utility balance sheet investment.”

With a sharp turn to the emerging economies and a nervous eye on policy-driven growth plans in the developed world, the renewable energy sector cannot escape its operating environment. But in a world where bank deposits threaten to lose money each year in a negative real interest rate environment and the desire for electricity access remains keen, double-digit annual sector growth over the next five years could prove tempting for unorthodox funding sources and irresistible for investors.

Download a full introduction to the IEA report here and purchase the full report with country-specific analysis here.