More than 3.5 TW of wind and solar capacity is currently operational worldwide, while another 2.5 TW of projects could face major lifecycle decisions by the 2040s, according to Wood Mackenzie’s latest Horizons report, Renewing Renewables: The Next Chapter in the Energy Transition.
The report said owners of ageing renewable energy projects will increasingly have to choose between decommissioning sites, extending the operating life of existing assets, or fully repowering projects. These decisions could influence global renewable energy targets, electricity prices and the economics of the energy transition.
Wind Decommissioning Already Underway
Decommissioning has already started across the global wind industry. Wood Mackenzie expects more than 30 GW of wind capacity to have been decommissioned worldwide by the end of 2026, with approximately two-thirds of this capacity taken offline between 2022 and 2026.
Solar deployment accelerated later than wind, but the report expects the ageing solar fleet to surpass wind in terms of decommissioning activity before 2040.
The increasing number of ageing projects is expected to create a significant opportunity for repowering, particularly at sites with established grid connections, planning approvals and community acceptance.
Repowering Could Offer Economic Advantages
Repowering existing renewable energy sites can allow developers to bring new generation capacity online faster than greenfield projects by utilizing existing infrastructure and avoiding some of the grid-connection and permitting delays affecting new developments.
Wood Mackenzie said capital and operating expenditures for repowering are broadly comparable with greenfield development. However, established sites can offer additional advantages, including favorable locations, existing infrastructure and higher potential power output.
Germany provides an example of the potential benefits. Wind speeds at sites decommissioned so far this decade are 4% higher on average than those at greenfield projects coming online. In some cases, the difference can reach 30%.
According to the report, a 4% increase in wind speeds can translate into approximately 7% higher capacity factors and 7% lower levelised cost of energy (LCOE), assuming other factors remain unchanged.
Developers Increasingly Target Existing Renewable Sites
The quality and location of existing renewable energy sites are already influencing investment strategies. Wood Mackenzie noted that a growing number of developers are acquiring operational projects in high-quality locations, removing ageing equipment and installing new wind or solar projects at the same sites.
The trend is becoming increasingly relevant in Europe and the U.S., where limited land availability, grid capacity constraints and lengthy planning processes can make new project development more challenging.
Søren Lassen, Head of Wind at Wood Mackenzie, said the energy transition is entering a phase increasingly defined by the renewal of existing renewable assets alongside growth in electricity demand.
Decommissioning Could Complicate Renewable Energy Targets
The impact of ageing renewable assets extends beyond individual project owners. Wood Mackenzie said governments are setting renewable capacity targets without always accounting for capacity that will be retired during the same period.
The report noted that this could make already ambitious deployment targets more difficult to achieve.
The European Commission has set a target of 500 GW of wind capacity by 2030, requiring approximately 37 GW of annual additions between 2023 and 2030.
Wood Mackenzie forecasts that around 17 GW of wind capacity will be decommissioned in Europe during the same period. As a result, the region would need to install an additional 2 GW per year on average simply to replace retired capacity, on top of the required growth rate.
The report also highlighted that policy support for repowering remains limited to a relatively small number of wind markets, potentially encouraging asset owners to extend the operating life of existing projects rather than reinvest in replacement capacity.
Repowering Could Affect Future Power Prices
The growing scale of repowering could also influence electricity markets. In Germany, Wood Mackenzie estimates that higher power generation from repowered wind and solar sites could reduce power prices by 12% to 19% during the 2040s.
The potential decline in power prices could have implications for renewable asset owners whose projects are expected to transition from long-term contracts to merchant revenues or corporate power purchase agreements (PPAs).
As a result, repowering could become an important factor in long-term project economics and revenue forecasting rather than simply an operational decision concerning ageing equipment.
Equipment Replacement to Drive Future Demand
For renewable equipment manufacturers, the increasing volume of replacement projects could create a substantial market even as growth in net renewable capacity additions slows.
Wood Mackenzie estimates that the volume of wind and solar equipment sales could be more than 60% higher in 2050 than in 2026, driven largely by the replacement of ageing assets.
During the 2040s, replacement projects associated with decommissioning are expected to account for 44% of global wind installations and 23% of global solar installations.
In some established European markets, replacement projects could account for more than 70% of installations.
Wood Mackenzie said the full impact of this transition is expected to emerge during the 2040s, but decisions by governments, equipment suppliers and asset owners in the coming years will influence their ability to respond to the growing replacement market.
The report concluded that renewable energy growth will increasingly depend not only on new capacity additions but also on the ability to renew, repower and replace ageing wind and solar assets at scale.
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