About 2.5TW of wind, solar to reach end of life in 2040s

More than 3.5TW of wind and solar capacity is now operating worldwide.

Renewable power generation will face a growing replacement cycle in the 2040s as 2.5 terawatts (TW) of wind and solar projects reach the end of their operating lives, according to Wood Mackenzie.

More than 3.5 TW of global wind and solar capacity is currently operational. As first-generation equipment ages, owners will have to decide whether to decommission projects, extend their operating lives or repower sites with new generation assets.

According to the firm’s report, Renewing renewables: The next chapter in the energy transition, decommissioning has already begun in the wind sector.

“By the end of 2026, more than 30 gigawatts (GW) of wind capacity will have been decommissioned worldwide, two-thirds of which was brought offline between 2022 and 2026,” it said.

Solar's ageing fleet is expected to overtake wind in terms of decommissioning before 2040, creating a growing need to replace retired capacity.

Repowering could allow developers to replace ageing equipment at established sites that already have grid connections, planning approvals and community acceptance.

Wood Mackenzie said this could help new generation capacity reach the market faster than greenfield projects, particularly in markets where grid capacity, land availability and planning approvals constrain new development.

Established sites can also offer better generation economics, the firm noted.

It added that wind speeds at sites decommissioned in Germany so far this decade are 4% higher than those at greenfield projects coming online on average, with the difference reaching as much as 30% at some sites.

A 4% increase in wind speeds translates into roughly 7% higher capacity factors and 7% lower levelised cost of energy, all else being equal.

The replacement cycle could also drive a significant share of future renewable installations. In the 2040s, replacement projects are expected to account for 44% of all wind installations and 23% of solar installations globally.

"Without installations replacing decommissioned projects, global wind and solar deployment would continue to decline year-on-year," said Søren Lassen, Head of Wind at Wood Mackenzie.

The report said governments that do not account for decommissioning in renewable capacity targets could find those targets harder to achieve, whilst asset owners will need to factor repowering into their long-term power price forecasts.

For power markets, repowering could also increase generation from established renewable sites.

In Germany, Wood Mackenzie estimates that increased output from repowered sites could reduce power prices by between 12% and 19% in the 2040s.