Vestas CEO Sees Turbine Sales Growing Amid Increased Competition

No, but of course, as we have said for some time, it's a very competitive industry. We've seen the average selling price per megawatt come down rapidly, especially in 2017. The good news is that we have seen a stable ASP for the last five to six quarters. We are a project business with lead time from orders to revenue. So what we see in the P&L of last year and into this year is a hardening of competitive pressure primarily from the price drop in 2017. But on the other hand, for the last five quarters, ASPs have been stable. So that's the selling prices.

Yeah, so the way to look at it is we have two big levers: cost out and new technology. We have launched a new turbine program just a couple of weeks ago, so that's the biggest lever on the cost side. We divide into two buckets: internal efficiency and meeting tariff challenges. We estimated last year that tariffs would impact total global production cost by about 1.5%, and we have mitigated roughly a third of that. The other cost increase is included in our outlook. Regarding Germany, the government is talking about withdrawing from coal plants by 2038 or so.

I would say very broad-based. In Europe, the 20% target for 2020 and 32% for 2030 provides a good framework. Markets are growing up and down. Germany increased auction volumes after a drastic reduction. The next challenge is permitting. Last year we grew 25% in America, 25% in another region, and 38% in Asia-Pacific on order intake. So there is solid volume growth based on policies and even more on increased competitiveness of wind. In technology-neutral auctions, wind will take a lot of share.

No, generally speaking we have already moved from subsidized feed-in tariffs to market-based auction systems. Technology-neutral auctions are all no subsidies. We are at a global average of around 50 to 55 US dollars per megawatt, and very few other technologies can beat that. In the US, the phase out of the PTC tax credit is a solid policy. It's a common way to introduce new technology. Gas went through the same. Last year we took 170 megawatts award under the 60% PTC that can be deployed to 2022. So the phase out is fair, and we can compensate with technology.