The IEA also predicted a "rebound" in 2021, nearing 2019 levels, as most of the projects delayed this year come online.
The agency, which had expected 2020 to be a bumper year for green energy, slashed its two-year forecast for growth in renewable capacity by almost 10 percent.
Nearly all mature markets are affected by downward revisions, except the United States where investors are rushing to finish projects before tax credits expire.
"The number of new renewable power installations worldwide is set to fall this year as a result of the unprecedented Covid-19 crisis, marking the first annual decline in 20 years ..."
Meanwhile, both the United States and China are expected to boost their renewable capacity this year and next, as firms rush to complete projects before the expiry of government incentives.More news: Fortnite Tenet trailer event
In terms of technology, solar photovoltaic (PV) will see more than half of expected expansion in 2020 and 2021, but deployment will fall from 110 GW in 2019 to over 90 GW this year.
Large-scale PV projects are expected to rebound in 2021, but overall installations are unlikely to surpass 2019 levels, IEA said.
Rooftop solar, however, will see slower recovery as households and small businesses review investments, IEA said. However, forecast uncertainty remains for projects that were planning to achieve financial close in 2020 and become operational next year. The impact of the crisis on offshore wind deployment is set to remain limited in 2020 and 2021, since offshore projects have longer construction periods than onshore ones.
But Birol warned the Covid-19 crisis was intensifying existing headwinds for renewables relating to financing, policy uncertainty and grid integration in several major markets, and urged governments to ensure economic recovery stimulus packages prioritised green energy, transport, and buildings.
The agency said governments have the opportunity to reverse the trend by making investment in renewables a key part of stimulus packages created to reinvigorate their economies.More news: Biotech firm reports 'positive' COVID-19 vaccine trial
"The resilience of renewable electricity to the impacts of the COVID-19 crisis is good news but can not be taken for granted", said IEA Executive Director Fatih Birol.
"Countries are continuing to build new wind turbines and solar plants, but at a much slower pace", said Fatih Birol, the IEA's executive director. "But if [support schemes] are postponed or cancelled it will be a serious hit for the growth of renewables, which we need badly to meet our climate goals".
This was even as stakeholders in the renewable energy sector in Nigeria have lamented the slow growth of the industry.
"The continued decline in renewable energy costs alone will not be enough to shelter the industry from the current crisis".More news: Hydroxychloroquine: Why is the United Kingdom bulk-buying Trump's favourite drug?