Cyclical or structural? The one question to answer before you sign off your 2027 wind budget

Many European wind owners are signing off 2027 budgets after two disappointing years. Whether those budgets hold comes down to one question: was the dip cyclical or structural? Here’s how to answer it.

Key takeaways

1. Don’t budget on the long-term average by default. If recent years no longer follow it, it’s the wrong baseline.
2. Separate the wind from everything else. Outages, curtailment and prices explain part of a miss. Only the wind part tells you what to plan on next.
3. Check diversification by wind system, not by map. Sites far apart can still rise and fall together.

The budget question you can’t dodge this year

2025 was a weak wind year across Europe: one weather pattern pushed 13 of 15 markets below their long-term average, with German wind yield 15% below its average, according to our analysis of ERA5 reanalysis data from ECMWF (1950-2025). For many portfolios - German onshore in particular - 2026 has continued that trend. Now the 2027 budget is due, and most teams fall back on one of two defaults: the long-term average, or the same average with a few percent shaved off.

Both are guesses. The long-term average assumes the last two years were a temporary dip that will even out. Shaving a few percent off assumes they weren’t, but nobody can say how much to shave. Get it wrong either way and you’re back in front of the board next year explaining another miss - or you’ve cut a budget, and a valuation, that didn’t need cutting.

Cyclical or structural: why the answer changes your budget

If the dip is cyclical - a run of bad years inside the range of past bad years - the long-term baseline still holds. The right move is patience, maybe a modest buffer.

If it’s structural - wind patterns at your sites have shifted - the baseline itself is wrong. The budget needs a new P50 - stale P50 models are one reason infrastructure funds have underperformed - and the portfolio may need a different mix.

Same two weak years, two very different decisions. That’s why this is the question to answer before you sign anything.

Three checks before you sign off

1. Put the last two years in context. Compare them, site by site, with 75 years of wind history (ERA5, 1950-2025). Inside the range of past bad years points to cyclical. Outside it points to structural.
2. Isolate the wind part. Strip out outages, curtailment and price effects. What’s left is the share of the miss the wind actually caused - and the only part a wind baseline can fix. These losses also tend to hit at the same time as weak wind, which is why separating them matters.
3. Count wind systems, not sites. Group your sites by the weather systems that drive them. If most of your capacity rides on one system, you’re less diversified than the map suggests. We’ve written more on this in why geography is not the same as climate diversification.

What it looked like for one IPP

A large European IPP asked us exactly this about its weak 2025. Comparing its sites with the long-term record and grouping them by wind system gave the answer: much of its portfolio sat within a single wind system, and our projections show that system weakening. With few assets elsewhere to offset it, the portfolio wasn’t in a dip - it was on a declining trend. The answer was structural, and the IPP realigned towards assets that capture the wind of the future.

What you get from us

• A realistic P50 and P90 for 2027 and the following years, per site and across the portfolio, in the convention you already use (P50, P75, your own index).
• A clear split between the wind part of your shortfall and everything else.
• A view of which wind systems your portfolio really depends on.

We’re honest about scope: this is the wind part of the budget, done right - not an explanation for every lost megawatt-hour. More on our work for wind and solar owners on our renewable energy page.

How we work

Since 2021 we’ve supported 26 clients, and European wind is now our focus, because the question above is the one wind owners need answered now. Our PhD scientists, working with an AI-powered system, sit inside the client’s team, start with the question on the table and stay until it’s answered. We deliver the result as a tailored application or as data fed into your own models.

Frequently asked questions

How do I know if wind underperformance is cyclical or structural?

Compare the weak years, site by site, with a long wind record - we use 75 years of ERA5 data (1950-2025). If they fall inside the range of past bad years, the dip is most likely cyclical and the long-term baseline still holds. If they fall outside it, or the wind systems driving your sites have shifted, it’s structural and the baseline needs updating.

Should I base my 2027 wind budget on the long-term average?

Only if recent years still follow it. After a weak 2025 and a weak 2026 for many portfolios, check first whether the dip is cyclical or structural. A cyclical dip supports the long-term average, perhaps with a modest buffer. A structural one calls for a new P50.

How much of a wind farm’s shortfall is caused by the wind itself?

It differs by site and year. Outages, curtailment and market prices all add to a revenue miss alongside the wind. Separating the wind resource from these operational and market losses shows which part a better wind baseline can fix and which part needs an operational answer.

Does spreading wind farms across Europe diversify the wind risk?

Not necessarily. Sites far apart can depend on the same large-scale wind system and have their weak years at the same time. Real diversification means spreading capacity across wind systems that don’t move together, not just across countries.

Find out for your sites

Book an intro call with us - and within 48 hours of our conversation, you’ll see how your sites’ last two years compare with 75 years of wind history.