Wood Mackenzie says more than 2.5 TW of solar and wind projects could reach end-of-life in the 2040s, creating a major replacement market
Repowering existing sites could benefit from established grid connections, permits and land while enabling higher output from newer technology
Equipment makers could see a major demand opportunity as asset owners repower assets, with solar and wind equipment sales expected to be more than 60% higher in 2050 than in 2026
More than 2.5 TW of global wind and solar projects could reach the end of their operating lives by the 2040s, creating a major replacement market as aging renewable assets are retired, extended or repowered, according to Wood Mackenzie.
In a new report, the consultancy said the decisions taken by project owners could have significant implications for renewable capacity targets, power prices and the economics of the energy transition.
Currently, more than 3.5 TW of wind and solar capacity is operational worldwide. As this fleet ages, project owners will have to decide whether to extend the life of existing assets, retire them or repower the sites with newer equipment.
The trend is already visible in wind. More than 30 GW of wind capacity is expected to have been decommissioned globally by the end of 2026. Around two-thirds of this capacity was taken offline between 2022 and 2026.
Solar deployment accelerated later than wind, but its aging fleet that’s older than 20 years, is expected to overtake wind before 2040, according to the report.
In its report titled Renewing renewables: The next chapter in the energy transition, Wood Mackenzie expects repowering to become an increasingly important part of the market. Existing renewable sites can offer advantages such as established grid connections, planning approvals and access to suitable land.
These factors potentially allow new equipment to be installed faster than at greenfield sites, and offer cost efficiencies and higher power output.
The technology gains can be significant, particularly for solar PV. Wood Mackenzie estimates that the average solar module efficiency increased by 69% between 2005 and 2025. Cell efficiency is also likely to increase by more than 50% by 2045 thanks to already available technology, it adds. This allows for more output on less land. It notes that today's solar sites can be up to 30% smaller than those in 2010 for the same capacity.
Solar modules and wind turbines, as they get more durable and efficient, will bring down waste benefiting both the asset owners as well as the society, argues Wood Mackenzie.
The growing replacement requirement could also make renewable capacity targets harder to achieve. Governments typically focus on the amount of new capacity required without fully accounting for projects that will be retired. To meet its 500 GW of wind power target between 2023 and 2030, analysts say the European Union (EU) will need to install 37 GW new capacity annually while 17 GW is to be decommissioned. This would require about 2 GW of additional annual installations simply to offset the retired capacity.
Repowering could also affect power prices. In Germany, Wood Mackenzie estimates that increased generation from repowered wind and solar sites could reduce power prices by 12% to 19% in the 2040s. This could affect the revenues of projects that have moved from long-term contracts to merchant markets or corporate power purchase agreements.
For equipment suppliers, however, the replacement cycle could create a larger market even as growth in net renewable capacity slows. Wood Mackenzie estimates that equipment sales for solar and wind will be more than 60% higher in 2050 than in 2026, driven by the need to replace aging assets.
The impact will vary by market. Wood Mackenzie expects decommissioning to drive more than 70% of installations in some established European markets during the 2040s, while the share could be as low as 1% in newer Asian markets. Replacements from decommissioning will account for 44% of all wind installations and 23% of all solar installations globally.
Wood Mackenzie therefore sees the industry moving toward what it calls an era of “energy renewal” in which replacing aging renewable assets becomes an increasingly important source of investment and installations.
“In the 2040s, we forecast the rate of growth in global power demand to slow, but solar and wind installations to increase because of decommissioning. In fact, we are expecting the era of renewal to lead to more installations than ever before,” according to the analysts.
“Governments that ignore decommissioning in their targets will miss them. Suppliers that do not plan for replacement demand will be caught short,” added Søren Lassen, Head of Wind at Wood Mackenzie. “And asset owners who do not factor repowering into their long-term power price forecasts risk fundamentally misjudging the revenue environment they will be operating in.”
The complete Wood Mackenzie report is available for free download on its website.
