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2012-11-19

The International Energy Agency (IEA) says electricity prices around the world are expected to rise by up to 15 per cent over the next decade.

IEA executive director Maria van der Hoeven says while there would be some regional differences, there would be a double digit increase globally.

"Electricity prices are expected to increase everywhere in real terms over the coming decade by 15 per cent on average," Ms van der Hoeven told the Australian Institute of Energy national conference in Sydney on Monday.

"That's principally due to rising fuel prices and also due to renewable (energy) subsidies.

"Where renewable subsidies are passed onto consumers through electricity prices, the additional tariff component can be substantial."

Ms van der Hoeven said electricity prices were highest in Japan and the European Union, well above those in the United States and China, due to higher fuel costs and higher capital costs and renewable subsidy costs.

Coal would remain the leading global fuel for electricity generation, given its use by the rapidly growing economies of China and India, among others, Ms van der Hoeven said.

Renewable resources would be the world's second largest global fuel for power generation by 2015, overtaking natural gas, she said.

"After a period of very strong growth, renewable energy resources have reached a crossroads as some governments look at the undoubted benefits, yes, but also look critically at how renewables are being supported and how much that is costing," Ms van der Hoeven said.

Ms van der Hoeven said in 2011, renewables received $US88 billion in subsidies, up 24 per cent from the prior year.

The IEA's World Energy Outlook, which was released recently, forecast global energy demand would grow by about a third between now and 2035.

Some 60 per cent of at growth would come from China, India and the Middle East, the report said, while it would "barely rise" in Organisation for Economic Cooperation and Development (OECD) countries.