Globally, the IEA expects an addition of 167GW of renewable power capacity this year, which will be 13% less than in 2019.
It means the influential agency is now forecasting growth for both 2020 and 2021 at 10 per cent lower than its projections prior to the pandemic outbreak, stunting the rollout of clean energy just as the world needs to ramp up its decarbonisation efforts in pursuit of the Paris Agreement goals.
Dr Fatih Birol, executive director of the IEA, praised the resilience of renewable electricity as good news, but warned that it can not be taken for granted.
It added that despite government efforts to strengthen the performance of discoms, the pending payments due to all electricity generators increased by 48 per cent in 2019, and nearly doubled in the case of renewables generators, a trend that continued in the first quarter of 2020.
Wednesday's outlook said solar installations will decline from 110 gigawatts in 2019 to 90 gigawatts this year, followed by a modest rebound in 2021, while decreases in onshore wind power will be "mostly compensated for" next year.
"Amid today's extraordinary health and economic challenges, governments must not lose sight of the essential task of stepping up clean energy transitions to enable us to emerge from the crisis on a secure and sustainable path".
Nearly all mature markets are affected by downward revisions, except the United States where investors are rushing to finish projects before tax credits expire.
However, the growth is expected to resume next year as most of the delayed projects come online and assuming a continuation of supportive government policies.
The UK government has promised to move ahead with an auction for renewable energy subsidy contracts next spring which will include bids from onshore wind and solar projects for the first time since the government lifted a block on financial support put in place four years ago.
"Putting emissions into a structural decline needed renewables to grow much faster across all sectors even before the COVID-19 crisis", the report said. Large-scale solar PV projects are expected to rebound in 2021, but overall installations are unlikely to surpass 2019 levels.
Rooftop solar, however, will see slower recovery as households and small businesses review investments, IEA said. But the impact of the Covid-19 crisis is likely to be limited for offshore wind, as such projects have longer construction periods, it explained.
IEA said renewables had already been facing challenges at the start of the year in several markets in terms of financing, policy uncertainty and grid integration, with Covid-19 now "intensifying those concerns".
"The continued decline in renewable energy costs alone will not be enough to shelter the industry from the current crisis".
Overall, for 2020, diesel consumption is expected to fall by 2 million barrels a day, or by 7%, the report said. The recent plunge in oil and gas prices is hurting the cost-competitiveness of renewable fuels and technologies that provide heating.
This is a 20 percent downward revision compared to the agency's previous forecast in which 2020 was due to be a record year for renewable power.