Buried treasure: will subsea cables be the UK's surprise clean power success story?

The UK is attracting a wave of new investments for the manufacture of high voltage subsea cables, suggesting that Europe's biggest offshore wind market may be making progress towards its ambitions of creating a supply chain to match.

Subsea array cables and export cables are among several priority areas identified under a UK government growth plan for offshore wind manufacturing, which also serves as a gateway for funding.

Sectors selected on the basis of their potential to develop industrial capacity “from design to delivery” also include wind turbine blades, towers and monopile foundations, but subsea cables stand out for the extent to which they are attracting new investments.

The newest addition to UK manufacturing capacity is the high voltage submarine cables factory that JDR Cables is soon to open in Blyth, in northeast England.

JDR, which is part of Poland’s Tele-Fonika Kable (TFK) group, will fabricate 66kV and 132kV array cables at the new plant and, after a period of testing, 275kV nearshore HVAC export cables.

The company is also upgrading its manufacturing facilities in Hartlepool and will trebling its overall capacity for array and export cabling.

Newer investment plans now taking shape for UK submarine cable manufacturing are grouping toward higher-voltage cables for HVDC transmission.

In addition to leading the trend toward HVDC-equipped offshore wind farms, such as the 320kV system being installed on the Dogger Bank development, the UK has emerged as one of the world's leading locations for international interconnectors.

Existing systems include the Nemo Link with Belgium, the North Sea Link (NSL) with Norway and the new HVDC Viking Link with Denmark, which was completed in 2023. A third interconnector with France was hooked up in 2022.

Sumitomo Electric, when it started construction of an extra-high voltage subsea transmission cable factory at Port of Nigg, in the Scottish Highlands, said the investments were “aiming to supply critical elements for the reinforcement of the UK electricity transmission grid and for connecting renewable energy production facilities to the grid”.

The Sumitomo factory will fabricate the 525kV cables that are emerging as the new standard as Europe builds a highly efficient highway for transferring huge amounts of electricity from sources of clean power, such as the North Sea and Baltic Sea.

An anchor project for the new factory was announced at last year’s ground-breaking ceremony when Sumitomo Electric and project partner Van Oord were selected by SSEN Transmission as the preferred bidder for Shetland 2, a 330km HVDC connection that will connect 2GW of renewable electricity to the UK network.

A new generation of mega-interconnectors now aim to connect UK consumers with clean energy generated thousands of kilometres away, stoking up interest even more.

'Severe shortage'

Plans for another extra-high voltage subsea cables factory in Scotland are taking shape after XLCC won funding from Scottish Enterprise and the UK Infrastructure Bank (UKIB) to develop a factory in Hunterston.

XLCC — which now has leading Chinese supplier Orient Cable (NBO) as an equity partner — was spun out of Xlinks First, a consortium aiming to connect 11.5GW of renewable capacity in Morocco to the UK grid via a 3,800km subsea cable.

The backers of the proposed £300m factory in Hunterston insist that it will become operational by the end of the decade, whether or not Xlinks goes ahead.

In yet another move, a unit of South Korea’s LS Cables & System has submitted planning permission to build a HVDC cable factory in north-east England and has engaged in negotiations with Port of Tyne for a long-term lease.

GIG's ASC Energy subsidiary, announced last month that the HVDC project will anchor the new factory in anticipation of a predicted “severe shortage in the supply of HVDC cable manufacturing to the required high standards”.

The new JDR factory in Blyth is also being built with scope to step up to HVDC.

European 'superhighways'

These projects could position the UK to become a major supplier for Europe’s emerging electricity 'superhighways'.

“This is not just about reaching for the optimum design but it is also about establishing standardisation that will enable the rapid deployment that we need in both the UK and Europe,” says Ajai Ahluwalia, head of supply chain with RenewableUK, an industry body.

“This also goes to the operability and the way that we connect systems. You can imagine the engineering challenges if it were otherwise.”

Demand for subsea power cables may be booming in Europe, but filling the order book for a new factory, such as the JDR facility at Blyth, can still be a challenge.

As in continental Europe, there is a debate in the UK about the kind of incentives that should be available to encourage direct investment in key clean energy sectors, and also over the kind of support that might be needed to fend off competition from overseas suppliers.

The UK's Labour government is hoping to give domestic manufacturers support with a new clean industry bonus (CIB) scheme.

The CIB is made available through the UK's Contracts for Difference (CfD) scheme and offers additional revenue support to companies able to satisfy a set of non-price criteria geared toward incentivising investment in sustainable local supply chains for essential offshore wind components and port infrastructure.

The CIB will provide £27m per gigawatt of support for offshore wind projects. Payments can reach as high as £200m for wind farm projects in the 7-8GW range.

Consultation on the CIB scheme ended 10 December and the application window is scheduled to open in February 2025.

"Our view is that we should be strengthening local supply chains, and the government has a major role to play in that — not least because they're providing subsidies to build new renewable projects," says James Young, chief strategy and compliance officer at JDR Cables.

The measures are more in the nature of carrot than stick in an offshore wind market that has long been recognised as one of the most open in the world.

“It is important to keep a balanced perspective of the multiple factors in play, especially the tension between bringing down the levelised cost of energy and avoiding the corrosive consequences of a race to the bottom,” said RenewableUK's Ahluwalia.

Foreign investments in UK manufacturing capacity are broadly welcomed, he says, "provided they comply fully with all the requirements of becoming a domestic cable provider".

Ahluwalia, who describes foreign direct investment as “the kind of competition that drives improvement” admits that the process can run more smoothly when the overseas company acts in a way that is more familiar to the hosts.

“Sumitomo is a successful company that is driven also by creating value to their shareholders. They have seen an opportunity in the UK and European market and decided to come to UK to set up shop. This is very promising for the UK as it demonstrates that we can provide that economic ecosystem where businesses believe they can be profitable.

“All we ask for is fair and level playing field across the supply chain," he says.

The UK has scored some successes in attracting investment in other parts of the offshore wind supply chain, such as the Siemens Gamesa turbine blade manufacturing facility in Hull, SeAH Wind’s near-complete monopile factory on Teeside and Smulder's fabrication base for offshore jackets and transition pieces near Newcastle.

Vestas is also eyeing plans for a turbine blade plant in Scotland.

Overall, however, there is recognition across the industry that UK manufacturing has so far punched below its weight in offshore wind, considering the country's leading market position in Europe.

JDR's Young is upbeat about the future, and an eventual move up to supplying cables for HVDC from Blyth.

The UK government is looking at how the supply chain can be developed locally and sustainably, in line with decarbonisation targets," he says.

"We're keen to see Allocation Round 7 and implementation of the clean industry bonuses. "

Apart from the introduction of qualitative bidding mechanisms, Young argues that managing demand is vital.

"We advocate setting ambitious targets but being realistic about how you're going to achieve them and pacing the growth year-on-year," he says.

"Let’s stop rushing after massive peaks to then face a shortage of projects in the next year. This is why we're supportive of countries having regular annual awards such as the CfD rounds in the UK, allowing for a steady build on momentum and avoidance of supply chain distortions."