Renewable energy as a percentage of the power mix is making dramatic gains, becoming the world's fastest-growing power source and expected to become the second most important electricity source overall within just the next three years, according to a new report by the International Energy Agency. It is a stunning turnaround in the world energy mix since the beginning of the century.

The report, titled Renewable Energy Mid-Term Market Report 2013, says that while many renewables no longer require high economic incentives, they do need long-term policies that continue to provide a predictable and reliable market, and that policy uncertainty remains the main risk.

If anything, the IEA report demonstrates how far the energy picture has changed in the world and particularly in the United States over the past 13 years. In 2001, a secretive energy task force commissioned by US Vice President Dick Cheney - and largely believed to have been dominated by the oil and gas industry - basically concluded that extraction of fossil fuels was the country's only viable energy option.

Cheney's report, which indicated that only seven of the 105 recommendations in the final report even had a reference to renewable energy. The report - and Cheney dismissed energy conservation out of hand. However, the state of California in the United States has kept per capita residential electricity consumption nearly constant as it grew by 75 percent in the rest of the United States. Since the 1970s, according to the National Resources Defense Council, energy efficiency has saved Californians US$65 billion and reduced residential electric bills by 25 percent below the national average.

Today onshore wind, already widespread in 2012, is expected to be deployed in almost 75 countries by 2018, the IEA report notes. Solar PV at the 100 MW level should be deployed in 65 countries by 2018, up from 30 in 2012, and bioenergy at that level in over 50 countries by 2018, up from 40 in 2012.

Renewable energy is expected to surpass natural gas as a source by 2016 and to double that derived from nuclear power in the next three years, becoming the second most important source of energy behind coal.

"Globally, renewable generation is estimated to rise to 25 percent of gross power generation in 2018, up from 20 percent in 2011 and 19 percent in 2006," the report continues.

The renewable drive is being led by wind and solar photovoltaics, with the share of non-hydro renewable power expected to double to 8 percent of gross generation in 2018, up from 4 percent in 2011 and 2 percent in 2006. In OECD countries, non-hydro renewable power is expected to rise to 11 percent of gross generation in 2018, up from 7 percent in 2012 and 3 percent in 2006.

Further out to 2018, renewable electricity generation should rise by 40 percent (1 990 Terawatt hours or 6 percent per year, from 4,860 TWh to 6,850 TWh and is 50 percent higher than the 1, 330 TWh increment registered between 2006 and 2012.

The fundamental components of renewable energy are not without controversy. Hydropower, for instance, remains the largest renewable resource despite the fact that there are deep reservations about big dams because of their detrimental effect on fish populations and a long list of other problems. The Three Gorges Dam on the Yangtze River in China, the world's biggest and most expensive hydroelectric project, has at least doubled in cost and has been cited for a litany of disasters including flooding some of the world's most scenic areas; the drowning of farmland; the submerging over 1,000 cities, villages and towns, the relocation of 1.3 million people to higher ground; landslides, algae and pollution that previously would have been flushed away, erosion of slopes, cracks in the dam, deteriorating water quality and rapid silting.

Undeterred, the Chinese government is building or planning to build scores more dams, particularly on Himalayan tributaries to the Mekong and other rivers, raising the hackles of China's downstream neighbors.

Both solar farms and windmill colonies have raised other environmental concerns including visual pollution and, in the case if windmills, the danger to bird life. Bioenergy, particularly from corn, has diverted hundreds of thousands of hectares away from growing critically needed food crops for a global population now approaching 7 billion people.

Energy conservation is particularly crucial. While hydropower remains the largest renewable source, according to the IEA, a portfolio of non-hydro renewable sources - bioenergy, wind, solar photovoltaic, solar thermal electricity from concentrating solar power (CSP) plants, geothermal and ocean power - is growing rapidly. The roles of biofuels for transport and renewable heat are also increasing, though at slower rates than renewable electricity.

Undeterred from diversion from food crops, global biofuels production is expected to rise by over 25 percent from 2012 to 2018, reaching 2.4 million barrels per day (mb/d) in 2018. Biofuels output, adjusted for energy content, should account for 3.9 percent of global oil demand for road transport in 2018, up from an estimated 3.4 percent in 2012 and 1.5 percent in 2006.

Still, the report notes, biofuels face short-term production challenges, "including the slow development of advanced biofuels, sluggish oil demand growth in some areas and policy uncertainty regarding the sustainability of feedstock supply chains."

Renewable energy development is becoming more complex as renewables increase their share in the global power mix. Despite remaining high, global new investment in renewable energy fell in 2012.

"Policy uncertainties continued to cloud the investment outlook for some key markets. In some countries, investment moderated in the face of macroeconomic uncertainties and incentive reductions, particularly in countries with strong deployment of solar PV."

Renewables continue to face strong competition from other energy sources in some markets, including the sudden, almost unpredicted flood of natural gas that has suddenly turned the US from energy importer to neutral and probably energy exporter over the next decade. In addition, manufacturing industries for renewables, particularly solar PV and wind, entered a more intense period of restructuring and consolidation.

"Nevertheless, the global deployment drivers of a portfolio of renewable sources have remained robust, despite economic, policy and industry turbulence," the report continues. "Over the longer term, the expected persistence of supportive policy frameworks will be crucial to maintaining deployment momentum. In the near term, despite challenges in some countries, the global picture is more than compensated for by renewable deployment elsewhere."