A record 161 gigawatts (GW) of renewable power capacity was installed last year, despite 23% less investment, according to a report from REN21 released today.
It shows that renewable sources are becoming less costly to use than both fossil fuel and nuclear options, with global capacity up by almost 9% over 2015 to approximately 2,017GW.
The findings also reveal that global energy-related CO2 emissions from fossil fuels remained stable for a third year despite increased demand, and 3% growth in GDP worldwide.
"The world is adding more renewable power capacity each year than it adds in new capacity from all fossil fuels combined," REN21 chair, Arthouros Zervos, said.
"As the share of renewables grows, we will need investment in infrastructure as well as a integrated transmission and distribution networks, and measures to balance supply and demand."
The research shows that the increase in capacity came despite a 30% fall in investment among emerging market countries, and a 14% decrease in developed nations.
It suggests that the energy transition is not happening fast enough to achieve the goals of the Paris agreement to keep global warming below 2°C, and that investment must rise in all renewable energy technologies.
The transport, heating and cooling sectors continue to lag behind the power sector, with the report urging increased investment in infrastructure that supports low-emission vehicles.
In addition, it argues that subsidies for fossil fuels and nuclear power, which dramatically exceed those for renewable technologies, are impeding progress, and should be reduced.
"The world is in a race against time. The single most important thing we could do to reduce CO2 emissions quickly and cost-effectively, is phase-out coal and speed up investments in energy efficiency and renewables," REN21 executive secretary, Christine Lins, said.
"When China announced in January that it was cancelling more than 100 coal plants currently in development, they set an example for governments everywhere.
"Change happens quickly when governments act and establish clear, long-term policy and financial signals and incentives."