Scotland is facing an uphill battle to reach its renewable targets for 2020 according to a report by Audit Scotland.

The watchdog praised the Scottish Government’s “clear vision”, which was reflected across other policy areas but despite steady progress it suggested the need to pick up the pace – doubling annual increases in installed capacity.

The Scottish Government is aiming to meet 30% of all energy needs and 100% of electricity demand by 2020.

The report found Scotland is two-fifths of the way towards meeting its electricity and community energy targets and a third of the way towards hitting its goal for renewable heat. Audit Scotland said there aren’t enough renewable heat projects in the pipeline and planned community projects will struggle to secure funding.

The Scottish Government has estimated renewable energy will generate £30 billion of investment and create 40,000 jobs by 2020 but the report described these figures as optimistic. It said investment is slower than expected as the industry is holding back until there is more clarity on certain issues and added a more conservative estimate for job numbers would be around 13,000.

A total of £209 million was spent on developing renewable energy in the 11 years up to 2012/13 and the report found funding is increasing rapidly, with the combined budget for 2013/14 and 2014/15 set to be £264 million. Despite this Audit Scotland said progress was being stifled by the economic climate, changes in UK energy policy and the resulting delays in funding.

Recommendations for the Scottish Government included setting out how it aims to develop renewable energy beyond the end of the decade and estimating how much public money would be needed for 2014/15 to attract enough private sector investment.

Auditor General for Scotland, Caroline Gardner said: “Scotland’s strategy for renewable energy is a good example of clear leadership and direction supported by integration across other policy areas. While there are aspects the Scottish Government and other public bodies should improve, the main challenge is that private sector investment has been slower than expected, reflecting the state of the economy and the uncertainty of developments in the wider UK energy sector.”