It might not all be bad news for the renewable energy industry. While plummeting oil and coal prices make fossil-fuel power projects more attractive, aggressive government support is making sure the renewable sector is still in the picture.
"Half of new power plants were renewables last year. Looking at the next five years, about two-thirds of total power plants will be filled by renewables, in particular hydropower, solar and geothermal," said Fatih Birol, chairman of the International Energy Agency (IEA), on Monday.
Speaking at an energy conference in Singapore, Birol explained that while alternative energy sources are competing with cheap coal prices, new government policies are giving renewables extra leverage.
"Renewables are becoming a mainstream fuel. They are thought to be mainly driven by OECD (Organization for Economic Cooperation and Development) countries, but we expect that in the next five years, two-thirds of global renewables will come from emerging countries, led by China and India," he said.
Ahead of the United Nations's climate change summit in Paris this December, the world's governments have pledged to reduce their carbon emissions footprint -- and renewable power will play a key role in attaining this. India for example, has pledged to source 40 percent of its electricity from renewable and other low-carbon sources by 2030.
But, Birol warned, it is vital that government are consistent and follow through with their plans.
"My main suggestion to governments is if they have a renewable support program, be consistent with it and don't change it every year or so since it give unpredictable signals to investors."
He singled out China as a particularly aggressive player, noting that Chinese renewable technology, along with nuclear power, will soon become one of the country's major energy exports.
Indeed, the State Grid Corp of China, the country's state-owned utility firm, believes by 2050, China's use of clean energy will be more than 80% of the country's overall energy mix.
Moreover, the dramatic decline of renewable prices is a further boost.
In the U.S. solar energy pricing is at a record low, research from the Lawrence Berkeley National Laboratory shows, and further falls are expected. Power from large utility-sale solar plants will be selling at below the price of electricity from natural gas by 2021, the research said.
The IEA's overall bullish stance on renewables comes amid a dismal outlook for oil.
As the price of the international benchmark Brent continues to trade below $50, Birol expects ample supply to last until mid-2016. And despite lower prices benefiting consumers, he warns of wider consequences. Investment into upstream oil production has declined by more than 20 percent this year, with North America and Brazil making most of the cuts, he said. According to IEA estimates, the losses are set to continue next year, which will mark the first time in two decades that investments have decreased for two consecutive years.
Further proof of growing optimism in renewables can be seen in employment trends.
Direct and indirect employment in renewable energy rose 18 percent last year while the oil and gas sector shed more than 200,000 jobs since mid-June last year, Reuters reported, citing data from the International Renewable Energy Agency and Swift Worldwide Resources.