Subsea cable growth spike to squeeze supply chain

WORLDWIDE: Alarm bells are ringing about the need for a quick acceleration in the supply chain to satisfy growing global demand for high-voltage (HV) subsea cables.

The push for offshore wind energy worldwide means a five-fold increase in submarine cable projects by 2020, according to forecasts from US-based consultancy Pike Research. With limited production facilities available for the manufacture of HV subsea cables, the report suggests that the current supply chain can only produce one-third of the cables required for projects planned in the next five years.

On the other side of the Atlantic, a report for the European Wind Energy Association (EWEA), Wind in Our Sails, warns of a dearth of suppliers for HV subsea cables - a situation compounded by high investment costs and long lead times for new supplies. As a result, substantial new cable manufacturing capacity will be needed if a shortage of these cables is to be avoided.

The Pike report, Submarine Electricity Transmission, says submarine transmission projects will increase from just over 60 worldwide in 2011 to more than 350 schemes needing cables by 2020, placing significant pressure on the existing industry.

"Unfortunately the supply chain for high-voltage submarine cables is not ready for the exploding demand for these products," said Pike Research president Clint Wheelcock. "Only a few manufacturers in the world are capable of producing high-voltage submarine cables and purchasers have few other places to turn when manufacturers tell them there will be an unexpectedly long wait for their desired product."

The report also highlights other constraints on new offshore wind projects. Site-engineering companies and cable-laying ships are highly specialised and also in limited supply. It indicates that, as demand looks set to continue to grow, manufacturers must make provision to meet customers' needs.

Those needs will be most acute in Europe, which will continue to be the leading region for submarine transmission deployment, representing nearly three-quarters of all projects by 2020. From 2011 to 2015, buyers and developers have proposed installing 14,000 kilometres of HV submarine cable in 53 separate projects in Europe - nearly three times the total laid in the last decade.

The report for EWEA acknowledges that early offshore wind projects, mostly in European waters, were in sheltered areas and needed relatively short cables. For later projects, new vessels, installation techniques and installation tools have had to be developed. The report points out that many of the problems encountered with offshore wind farm construction, as wind projects get bigger and further out to sea, have been related to cable installation and protection.

Wind in Our Sails identifies five main suppliers of HV subsea cable: Swiss-Swedish group ABB, Nexans of Norway, Prysmian of Italy, NKT of Germany and General Cable, also from Germany. It says that these firms offer limited capacity.

The lead time associated with bringing new subsea capacity online is of three to four years. "Therefore it follows that significant investment decisions in new capacity need to be made by the end of 2011 if a bottleneck situation is to be avoided in the middle of the decade," said the report.

Expansion is most likely to come from existing subsea cable suppliers setting up new production facilities. Current manufacturers of medium-voltage (MV) subsea cables may consider expanding their capabilities to supply HV subsea cables.

According to the report, the supply base for MV subsea cables for array cabling within the wind farm is considerably more diverse and has also attracted firms that were active in the offshore oil and gas sector, which is the other key user of these products. "In the coming decade, the offshore wind sector is expected to become the predominant market for both MV and HV subsea cables, but additional production capacity, especially for HV cables, appears to be an urgent requirement," it concludes.

German grid operator Tennet said last month that while it has nine cable connections to German offshore wind farms underway, construction of more is "no longer desirable or possible" due to lack of staff, materials and finance.

It seems the message is that demand for cables for offshore wind is going to rocket in the next few years and there are real issues around whether manufacturing can keep up. It is a challenge the industry must meet to avoid the promise of offshore wind being suddenly and painfully stalled.

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