Vestas is a leading player in the development of sustainable energy solutions, and with a broad support for reducing CO2 emissions, the market environment continues to provide a favourable backdrop for the wind power industry.
With an expected growth in the demand for electricity of almost 70 percent from 2015 to 2040 combined with the continuously improving economics of wind, the future looks bright for wind energy.
The trend towards auction systems is now present in most regions, recently exemplified by the auctions in Spain and Germany. The transition enhances the competitive environment but at the same time increases the appetite for wind power. Scale and full understanding of every element in the value chain is therefore more important than ever, and Vestas finds itself well-positioned to reap the benefits of this development.
Vestas’ strategy continues to be on track. We are delivering growth in both the wind turbine and service business, and we continue to lower the cost of energy to the benefit of both our customers and Vestas. While doing so, Vestas still keeps a strong focus on controlling and improving operational excellence, for instance by managing working capital and keeping costs under control.
Activity levels were yet again high during the first two quarters of the year. Order intake was at a satisfying level, and the number of produced and shipped wind turbines increased by 16 percent. The service order backlog increased by 4 percent during the first half of 2017, underlining our strong offerings within the area. The worldwide fleet of serviced wind turbines now stands at 71 GW. Further, we introduced new variants of the 2 MW platform, while upgrading the 3 MW platform to a 4 MW platform and at the same adding an even larger rotor.
As a result of the high activity levels and a strong financial performance, we have decided to initiate a share buy-back programme of up to EUR 600m. Coming on top of a EUR 95m share buy-back programme earlier this year, and combined with EUR 278m returned as dividends, Vestas continues to create value for its shareholders.
Performance in the offshore joint venture with Mitsubishi Heavy Industries is also on track and first half year 2017 was a busy period for MHI Vestas Offshore Wind A/S. The largest order ever of 450 MW for the Borkum Riffgrund II project was received and contributed to a total 2.5 GW of firm orders since the formation of the joint venture. The most powerful wind turbine in the market, the V164-8.0 MW, was in January 2017 uprated to 9.0 MW and again to 9.5 MW in June 2017. It should, however, be noted that the joint venture is still ramping up for installation of the V164 projects, and in the short-term this will adversely impact earnings in the company, but in the mid to longer term, MHI Vestas Offshore Wind is expected to become a strong and meaningful contributor to the earnings of Vestas.
This first half of 2017 was indeed a busy period for Vestas and I want to thank all employees of the Vestas Group for their dedicated work. I look forward to continuing our efforts in the second part of the year.