Vestas: A greener economy

Vestas' megawatt orders increased last year and its combined order backlog also continued to surge throughout the year

By Juan Emilio Ballesteros

08/03/2018

Despite strong competition in the sector, Vestas earnings amounted to €10 billion in 2017, a stable result that will allow further growth. This is true in markets such as Mexico, where the firm has become a leader in the sector.

Danish multinational Vestas believes that the wind power industry is in the midst of a transition towards an unsubsidized renewable market that is more mature and highly competitive and will likely further consolidate the industry. While the markets’ situation generates competition and pushes prices. It also creates opportunities for growth and strengthens international leadership at a time that reflects that wind power has already reached commercial levels.

The company’s 2017 results confirm that Vestas maintains favorable levels, with total earnings amounting to €10 billion. Its EBIT stood at 12.4 percent, while net investments reached €407 million and its free cash flow amounted to €218 million. Overall wind turbine orders rose from 10,494 MW in 2016 to 11,176 MW in 2017, and the total value of its service backlog grew from €1.4 billion to €12.1 billion.

Global Leader in Wind Power

The company’s megawatt orders increased last year and its combined order backlog also continued to surge throughout the year. Vestas estimates its income will grow to €11 billion by 2018, with a significant increase in maintenance services. The company is regarded as a global leader, a status confirmed by its 90 GW installed capacity in 76 countries, with a special impact in Latin America and Europe.

Thanks to its innovative technology, it has had a very positive impact on the French and Italian markets, where it is the number one manufacturer in terms of installed capacity. It has also done well in the United States, where new turbine orders have drastically increased. America constitutes one of the markets where it has the best possibilities. In this country, where the company installed nearly 3,000 MW in 2017, orders for components that will enable to build future projects in the region amounted to 266 MW, most of which will materialize by 2021.

The implementation of tender systems in various Latin American countries reveals that wind power’s potential in the region continues to be strong. The company’s growth has been very significant in these countries. Demand for energy security and diversity of supply have boosted the transition toward the tender system. Countries like Mexico and Argentina carried out their first energy tenders in 2016, and a substantial share of new electricity contracts were awarded to wind power. Vestas and its customers played a very active role these tenders, aiming to obtain the auctioned capacity by placing the most competitive and cost-effective bid.

With over 1.3 GW of new turbine orders in 2017 coming just from these two markets, the company confirmed its renovated efforts in Latin America, in accordance with its local strategic plan. In 2017, Vestas reached over 1.7 GW – built or under construction – in Latin America, which is no doubt a testament to the company’s progress in the region.

Angelica Ruiz Celis, Director-General of Vestas in Mexico and Latin America is proud to witness Mexico’s commitment to promoting renewables.  “In just a few years, the country has made incredible progress, becoming an example for other countries in Latin America – she said – With our strong presence in the country and our long-term localisation plan, Vestas is very well positioned to continue supporting Mexico’s transition towards a greener economy.”

Last year, Vestas took an order to install 27 V136-3.45 MW turbines for a 93 MW wind farm located in Tamaulipas. Furthermore, the company is set to provide Active Output Management 5000 (AOM5000) maintenance services for 15 years. Also in Tamaulipas, Wind Power company Vicente Guerrero s placed a 118 MW order with Vestas for one if its wind farms. The order is part of a power purchase agreement (PPA) that entails installing six V136-3.45 MW wind turbine units and 27 of this same model optimized to reach 3.6 MW.

The Danish company says that with this contract, Vestas’ order intake in Mexico stood at over 700 MW in 2017, including what is set to become the nation’s largest wind farm, Reynosa III (424 MW), also located in Tamaulipas. With nearly 1 GW of installed capacity just in Tamaulipas, Vestas remarked that strong demand coming from the country underlines its strategic focus in the Mexican market, offering the latest technology and tailored solutions to optimize the wind farms’ potential. The company has an overall capacity of 1.7 MW installed or under construction in Mexico. These new facilities in Tamaulipas will generate 7,400 new jobs in the region.

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