Laying cables
Laying cables for the BritNed interconnector
Credit: ABB

The high-voltage submarine power cable sector looks set to flourish, with 70 new projects proposed by 2016. But a new report warns of a looming supply chain bottleneck with alarming implications for the highly specialised industry’s development, writes Kelvin Ross.

The high-voltage submarine cable market is facing significant challenges, with the current supply chain capable of fulfilling only half of the planned cable projects over the next five years, according to analysts at Pike Research.

“Nearly all aspects of the existing market are likely to face delays, increased costs and other difficulties,” according to the research house’s new report on the sector.

While existing cable manufacturers are expanding their production capacity to meet demand, “project organisers still may have to push back planned cable projects” and “even the slightest delays, due to weather or other factors, may cause far-reaching delays in a chain reaction across the market,” according to the US company.

In its report, Pike states that cable project operators are beginning talks with cable suppliers “early in the planning stages with hopes of being on the manufacturers’ radar when it comes time to sign contracts and plan production schedules”.

Cables that fail to get their place in the production line will face increased costs that could easily push projects over budget, warns Pike. “The result could be higher energy costs for the populations that would have benefited from these grid interconnectors, island connections, or wind farm projects,” it adds. “Additional market players or increased capacity from existing players would allow the submarine power cable industry to come significantly closer to meeting the high demand in their extremely specialised market.”

The high-voltage submarine cable has grown steadily in recent years, thanks mainly to the need to connect offshore wind farms to onshore grids. In May, French cable firm Nexans won a contract worth more than €50 million ($65 million) to supply 57 km of high-voltage subsea power export cables to connect the Northwind wind farm in the North Sea to an onshore grid connection at Zeebrugge.

NKT Cables
NKT Cables’ new factory in Cologne, Germany
Credit: NKT Cables

Pike’s warning also coincides with the commissioning of the first electricity link between Ireland and the UK. The 500 MW EirGrid East West Interconnector runs over 260 km between Deeside in north Wales and Woodland, County Meath in Ireland.

September also saw the announcement of Turkey’s first high-voltage submarine power cable link. Prysmian Group won a contract worth €67 million from the Turkish electricity transmission utility TEIAS for the design, supply, installation and commissioning of the link to connect Europe and Asia across the Dardanelles Strait. The link comprises a double AC power transmission circuit of about 4 km with a rating of 1000 MW for each circuit between the substations of Lapseki, on the Asian side, and Sütlüce, on the European side, across the Dardanelles strait.

The 380 kV XLPE insulated cables will be manufactured in Prysmian’s submarine European production facilities. Commissioning is scheduled for the second half of 2014. The Dardanelles link is one of the first AC 380 kV submarine cable links using XLPE insulated cables in the world.

While these developments show that submarine cables are a solution to interconnection challenges across Europe, the Pike report warns of “the constricted supply chain for these highly specialised and expensive products”.

Only a handful of manufacturers can deliver cables at the capacity and length often required by today’s grid operators and “as projects become more ambitious in terms of cable depth, the field of suppliers becomes even smaller”, according to the report. “These projected cable projects are forced to plan around substantial manufacturing wait times while contending with complex and often cryptic regulations from many jurisdictions.

“Although the planners of prospective submarine cable projects may be relieved to see new entrants into various aspects of the market, they must also be cautious not to fall victim to contracting with suppliers who have little or no experience in this highly specialised field. The result is that the experienced operators that are planning large projects are sending their business to the well-known suppliers, while the new, inexperienced project planners may take risks with new entrants.”

Submarine cable deployments
Submarine cable deployments by growth scenario, 2000–20
Source: Pike Research

Pike calculates that, to date, purchasers and developers have proposed installing another 6800 km of high-voltage subsea cables in almost 70 new projects around the world between now and 2016. This is 3200 km more than that constructed in the previous five years. Pike warns: “This growth will be impossible to realise using only the current, already strained, channels of supply.”

Yet a recent investment by ABB suggests the sector could still narrow the shortfall. At the end of last year, the automation and power technology specialist announced plans to spend $400 million to meet growing demand for subsea cables by doubling the capacity of its high-voltage cables manufacturing facility in Karlskrona, Sweden. The investment will include constructing new buildings and installing additional manufacturing lines at the firm’s existing plant. Phased implementation of the investment is due to complete by 2015.

“We believe it is needed, and that is why we are making the investment,” Brice Koch, head of Power Systems and a member of the ABB Group Executive Committee, told PEi. “But it’s not enough to simply invest – you also need to have the know-how. The challenge is not just to produce the cable but everything around it, including the installation.”