Denmark's DONG Energy beat second-quarter profit forecasts on Thursday and said the start-up of more projects and a fall in construction costs would generate more cash, possibly making way for higher shareholder returns in coming years.
DONG, the world's largest owner of offshore wind power, has a strategy of farming down, or selling off, large stakes in wind farms in order to invest the capital into new projects.
In the next couple of years more projects will start producing, raising revenue and making it less reliant on such stake sales. DONG is looking to almost double its capacity to 6.7 GW in 2020.
"When we look 1-3 years into the future we believe that we will begin to generate excess financial headroom," Chief Executive Henrik Poulsen said.
This could allow for increased dividends or buybacks, but the firm will first look at investing in new opportunities while also raising the bar for farm downs.
"Once we have explored additional growth opportunities and considered the need for farm downs should there be additional financial headroom beyond that, it would be distributed back to the shareholders," Poulsen said.
DONG shares were down 1.25 percent at 0940 GMT.
Jyske Bank analyst Frans Hoyer said hopes for significant shareholder payouts in the near-term "may be dashed somewhat".
Second-quarter core earnings (EBITDA) rose 70 percent year-on-year to 4.4 billion crowns ($694 million), above the 3.4 billion expected by analysts in a Reuters poll, due to a deferred gain of 1.4 billion crowns related to a previous wind farm stake sale being recognised.
Europe has led the way in offshore wind but developers are looking across the Atlantic in the hunt for new lucrative opportunities as state support in mature European markets is set to decline.
DONG will submit a bid in December for the first U.S. large-scale offshore wind auction in Massachusetts and is looking broadly at other opportunities in New York State, New Jersey, Maryland and Virginia, said Poulsen.
Competition is set to be fierce as new players in renewables, such as oil majors Statoil (STO) and Shell are also looking to the undeveloped market to diversify their portfolios.
"I believe that Shell and Statoil clearly are competitors all around the world ... They have also started their journey in the U.S. so we will be competing against them there".
DONG forecast 17-19 billion crowns in 2017 EBITDA from continuing operations, a target it raised this week due to the sale of a stake in a German offshore wind project.
Reporting by Stine Jacobsen