The agency warns that it may fall short of delivering the generation required to meet global climate change objectives.
Wind, solar and hydro and other renewables will account for approximately 26% of global electricity generation by the end of 2020 from about 22% in 2013.
The report said the expansion will slow in the next five years unless policy uncertainty is diminished.
Investment in new renewable energy capacity will average more than $230bn a year through 2020 from $250bn in 2013.
Non organization for economic co-operation and development (OECD) countries are expected to account for about 70% of new renewable power capacity from 2013 to 2020.
The report noted that in the European Union, uncertainties remain over the precise nature of the post-2020 renewable policy framework and the build-out of a pan-European grid to facilitate the integration of variable renewables.
IEA executive director Maria van der Hoeven said: "Renewables are a necessary part of energy security. However, just when they are becoming a cost-competitive option in an increasing number of cases, policy and regulatory uncertainty is rising in some key markets. This stems from concerns about the costs of deploying renewables.
"Governments must distinguish more clearly between the past, present and future, as costs are falling over time.
"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. This calls for a serious reflection on market design needed to achieve a more sustainable world energy mix."
Image: Investment in new renewable energy capacity will average more than $230bn a year through 2020 from $250bn in 2013. Photo: Courtesy of GraphicObsession/International Energy Agency.
