Renewables Face Decisive Repowering Decisions by 2040
News related to:Wood Mackenzie · 3 min read
More than 3.5 terawatts (TW) of global wind and solar capacity is operational, but as first-generation equipment ages, a further 2.5 TW of projects will face a stark decision for owners by the 2040s: abandon the site, invest to extend its life, or renew it entirely. This decision will have a profound impact on renewable energy targets, power prices, and the economics of the energy transition, according to Wood Mackenzie's latest Horizons report.
By the end of 2026, more than 30 gigawatts (GW) of wind capacity will have been decommissioned worldwide, with two-thirds of that capacity brought offline between 2022 and 2026. Solar began its rapid deployment later than wind, but its aging fleet is set to overtake wind before 2040.
Repowering offers a compelling economic case. Because a site already has an existing grid connection, planning approval, and community acceptance, new equipment can reach the market faster than a greenfield project, bypassing the queue and permitting delays that have slowed new development in many markets. The capital and operating expenditures are broadly similar to greenfield development, but the economic advantage of repowering extends to other factors, such as the location, cost efficiencies, and power output.
The quality of established sites makes that advantage significant. In Germany, the wind speeds at sites decommissioned so far this decade are 4% higher than those at greenfield projects coming online on average, and the gap can be as wide as 30%. A 4% increase in wind speeds translates into roughly 7% higher capacity factors and 7% lower levelised cost of energy (LCOE), all else being equal.
This dynamic is already reshaping how companies approach the market. A growing number of developers are acquiring operational projects in prime locations, decommissioning the existing equipment, and installing an entirely new project on the same site, a trend that is becoming increasingly common in markets such as Europe and the US, where land availability, grid capacity, or planning approval for new development is constrained.
The implications extend well beyond individual asset owners. Governments across the world are setting renewable capacity targets without accounting for decommissioning, and that blind spot could make already ambitious goals even harder to reach. At the same time, policy incentives for repowering are limited to a handful of wind markets, incentivising asset owners to pursue longer operational lifetimes instead of reinvesting in their operational portfolios.
The European Commission has targeted 500 GW of wind power by 2030, requiring roughly 37 GW of annual additions between 2023 and 2030. Wood Mackenzie forecasts that 17 GW will be decommissioned in that same period, meaning the bloc must add an extra 2 GW per year on average simply to offset losses, on top of a build rate it is already failing to meet.
The market consequences will be just as significant. In Germany, the increased power output from repowering existing sites with new modules and turbines could reduce power prices by between 12% and 19% in the 2040s. That is a material downside risk for asset owners whose projects will have moved off long-term contracts and onto merchant revenues or corporate power purchase agreements by that point, making repowering a critical variable in long-term project economics, not just an operational decision.
For equipment suppliers, the picture is more counterintuitive. Even as the rate of growth in net capacity additions slows, Wood Mackenzie estimates that the volume of actual equipment sales will be more than 60% higher in 2050 than in 2026, driven by the need to replace ageing assets at scale. In the 2040s alone, replacements from decommissioning will account for 44% of all wind installations and 23% of all solar installations globally. In some established markets in Europe, it could even reach more than 70%.
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