LONDON, Oct 4 (Reuters) - The International Energy Agency (IEA) raised its forecasts on Wednesday for renewable energy over the next five years following a record 2016, adding that renewables growth is squeezing natural gas and coal.

In its medium-term renewables market report, the IEA expects global renewable electricity capacity to rise by more than 920 gigawatts, or 43 percent, by 2022, due to supportive policies for low-carbon energy and cost reductions for solar PV and wind.

The projected growth is 12 percent more bullish than the IEA's forecast last year.

In 2016, net additions to renewable energy capacity - including hydropower, solar, wind, bioenergy, wave and tidal - set another world record, growing by 165 gigawatts (GW), 6 percent more than in 2015, the report said.

Solar PV capacity grew by 50 percent to reach more than 74 GW last year and it was the first time solar PV additions rose faster than any other fuel, surpassing the net growth in coal.

"Our expectation is that (growth in) renewable electricity generation in the next five years will be higher than electricity generation from coal and natural gas times two," IEA executive director Fatih Birol told journalists.

The agency sees renewable power generation rising by more than a third to 8,169 terawatt-hours (TWh) in 2022 - from around 6,012 TWh in 2016 - which is equivalent to the combined electricity consumption of China, India and Germany.

"Natural gas will continue to grow but moving toward the industrial and heating sectors," Birol said.

"We still think LNG (liquefied natural gas) will be a key source for power generation especially in Asia, even though we expect renewables to grow as well," he said.

The Paris-based IEA, the West's leading energy forecaster, had been criticised by environment campaigners in previous years for underestimating the growth of renewables and over-emphasising the continued role of fossil fuels.

Renewables will account for 29 percent of the global energy mix in five years' time, compared to the 24 percent forecast last year.

"While coal remains the largest source of electricity generation in 2022, renewables close in on its lead. In 2016, renewable generation was 34 percent less than coal but by 2022 this gap will be halved to just 17 percent," the report said.

China will be responsible for the largest amount of global renewable capacity growth, driven by strong government targets, economic incentives and air pollution concerns.

Despite policy uncertainty, the United States will remain the second-largest renewables growth market, mainly due to tax incentives and state-level policies for solar PV, the IEA said.

India's renewable electricity growth could surpass the European Union's by 2022 for it to become the joint second-largest growth market alongside the United States as it is seen more than doubling its current capacity.

(Additional reporting by Ron Bousso; editing by Dale Hudson and Jason Neely)

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