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Offshore power cable demand is rising rapidly, but is the market equipped to cope with this boom?

The demand for offshore power cables is set to grow exponentially in line with rising offshore wind capacity. But are the Cable-Laying fleet and power cable infrastructure prepared to support this demand? Spinergie analyst Helia Briaud examines the expectations of this booming sector.

The offshore power cable market is booming, with new records in the number of kilometers laid each year. Between 2020, when a total of 1,932 km was laid, and the forecast for 2028, which indicates 18,173 km will be laid, there was a 9.5-fold increase. The main driver behind these increases is the offshore wind market.

Offshore wind is also booming, with ambitious capacity targets to be reached by 2030 globally. The amount of array and export cables being laid coincides with the increase in wind capacity, with the annual capacity installed increasing by 30% since 2019. Likewise, the amount of interconnector cables being installed is also on an upward trend, and this is set to continue due to projects with increasingly long interconnectors being observed in Europe within the coming years.

How is the supply chain adapting to cable demand?

With constant pressures across the full global supply chain, from vessel supply to port capacity, it is important to examine how each sector interacts and the impact of increased demand on each. This is no less true of the cable sector, especially in light of ongoing global economic crises, which are causing cautious investment.

cable demand according to spinergie forecast

1. Cable manufacturing

Despite the fragile economic context, cable-laying companies have exhibited excellent financial performance. For example, NKT and Nexans show record EBITDA margins in their recently published 2023 annual reports, indicating robust cash flow for investment.

Furthermore, with the subsea cable industry's demand projected to increase five-fold by 2030, major players like Prysmian and JDR are significantly investing in expanding their manufacturing capabilities across the most active offshore wind regions: Europe, APAC, and North America.

Additional initiatives include consolidation of existing plants by adapting them to market trends alongside expansion. This could also mean incorporating new technologies. For example, Taihan Cable & Solution built a test facility for high-voltage direct current (HVDC) cables at its Dangjin plant - such cables are increasingly used in larger wind farms.

Plans are underway for new cable facilities in key regions, such as Europe. Meanwhile, there are also plans for new facilities in the USA and Asia to support those emerging markets.

cable facilities with offshore loading in Europe

There are multiple well-established production units in Europe, but there is pressure on them as demand increases. Recent projects have shown that there is an uptick in reliance on production units further afield to ensure deadlines can still be met. For example, export cabling for the Baltica 2 project offshore Poland was sourced from ZTT Submarine Cable in China. The UK’s Seagreen 1 project also saw two of its three export cables sourced from outside Europe, this time in the USA.

Cable manufacturers continue to invest in facilities bordering the North Sea despite the region's relative maturity in the wind market. These new factories aim to reduce cable lead times while also strengthening energy security.

New facilities are planned in the UK: XLCC and JDR at Hunterson and Cambois, respectively. At Cambois, JDR’s £130 million, 69,000 sqm factory (expected to be in operation from 2024) will include a new catenary continuous vulcanization (CCV) line, making it the only facility in the UK capable of full start-to-finish manufacturing of high-voltage subsea cables. Meanwhile, the £1.4 billion XLCC facility on Scotland's west coast is expected to see cable production begin in 2026.

Perhaps more surprisingly, Sumitomo is also planning a UK cable factory, based at Nigg in the Cromarty Firth. This marks the Japanese manufacturer's entry into Europe and the first step towards understanding the European market with minimal investment and risk.  The facility will supply cables for offshore wind farms and further grid connections. Strategically, the project is well-placed to serve one of the largest markets for power cables, with both the UK and Scottish governments having ambitious Net-Zero deadlines of 2050 and 2045, respectively.

Sumitomo has previously won multiple European contracts using its Japanese facility, including the NEMO Link between the UK and Belgium and the Greenlink Interconnector between the UK and Ireland. The company also has experience with European wind farm cables, most notably with the UK's Gwynt y Môr wind farm. The manufacturer’s 400 kV HVDC XLPE cable system is one of the highest voltages in commercial operation today. With many upcoming larger wind farm projects utilizing HVDC, Sumitomo’s new UK-based facility will continue to build on the company's foothold in the region and take advantage of increasing demand for high-end cables.

cable facilities with offshore loading outside Europe

Two trends have been identified with the entry of new geographical areas to the offshore wind space: the USA and Asia.

  1. Key European players already have factories operating or under construction in these regions. Prysmian’s facilities in the USA are a good case in point. 
  2. The introduction of new local players, mainly in Asia, who want to join the offshore wind industry. Here, we see more construction of new production units, or the consolidation of existing ones, such as the joint venture between NKT and Walsin for a new cable facility in Taiwan.

This analysis excludes Chinese cable facilities manufacturing cables for the local market only.

2. Cable installation

A proportional increase in the Cable-Laying Vessels (CLV) fleet is required to support the industry's expanding needs. Most recently, Nexans unveiled the name of its new cable-laying vessel, “NEXANS ELECTRA,”  which is expected to join the market in 2026. It adds to the nine newbuilds that will expand the current fleet by the end of 2026, contrasting with the four launched from 2020 to 2024.

This growth trajectory occurs against a backdrop of tight economic conditions and high-interest rates, raising curiosity about the escalating investments in cable layers, particularly those with enhanced laying capabilities.

under construction clv

The chart above indicates the CLVs under construction and when they are expected to enter the market. These units can be divided into two categories. 

Established Players

Key players in the cable-laying market, such as Jan de Nul, Prysmian, and Nexans, have ordered several CLVs. A number of these CLVs have record-breaking laying capacities, and two of the largest are set for delivery in 2026: Jan de Nul’s Fleeming Jenkin and Nexans Nexans Electra. 

These vessels will enable several cables to be laid simultaneously, three, potentially even four, and a larger quantity of cable will be laid per vessel trip. This means significant efficiency gains, less time lost in transit between the wind farm and facilities, and less propellant consumed. 

New Players

In addition to the CLVs ordered by major players, the market is also witnessing new entrants to the cable installation market, such as Toyo and Megamas. While these newbuilds have a lower laying capacity than the likes of Nexans Electra and Fleeming Jenkin, they are still slightly above the average capacity of the current fleet. Despite being lower in spec, the market is being met with such high pressure that there is room for smaller players.

It is also interesting to note that investments in new wind vessels appear to favor CLVs over Wind Turbine Installation Vessels (WTIVs), as there were no new WTIV orders in 2023 compared to seven for CLVs. There are a few reasons for this. CLVs are a safer investment than WTIVs in a cautionary environment because they can also be used in power cable installation, and being smaller than installation vessels, they are also cheaper to build.

Most companies involved in export cable laying campaigns also install interconnectors. The operational requirements are comparable. The power cable market is expected to grow six-fold by 2028, providing a reassuring backup for installers.

Which companies are best positioned in the offshore cable market?

Companies in the subsea cable market are categorized based on their manufacturing, installation capability, or both.

3 profiles of cable players - Spinergie

The image above is a Venn diagram representing a mapping of the cable market with the top five cable installers. We see that most companies that can provide the full scope of a project are ranked very well. This is also reflected in their financial results, with Nexans, Prymian, and LS Cable all reporting record EBITDA. 

So, for now, it is clear that companies that offer both manufacturing and installation are well-positioned; it must be noted that they are also facing pressure and, as such, are beginning to subcontract certain installation contracts pending the arrival of their newbuild CLVs. Most recently, DEME announced the award of two major contracts awarded by Prysmian for the IJmuiden Ver Alpha and Nederwiek 1 offshore grid systems.

Market players in cable installation by cable type - Spinergie

Spinergie sees offshore cable demand surges as offshore wind capacity deadlines approach. The cable sector is moving to adapt to this increased demand, with manufacturers expanding globally and a wave of new high-capacity cable-laying vessels expected to enter the market by the end of 2026. Spinergie's analysis has also highlighted that companies offering manufacturing and installation have the current advantage. Still, even they have been forced to adapt by subcontracting work until their fleets expand.

So, can the sector meet this ever-increasing demand, with over 18,000 km of cable expected to be laid in 2028 alone? The outlook is mostly uncertain for now, as it is only truly possible to see that demand will be met by 2025. Beyond 2025, the outlook becomes significantly more complicated, with no additional vessel orders visible beyond 2026. However, current forecasts indicate that the combination of increased demand and lack of supply for vessels or manufacturing capabilities will lead to a vast supply gap.

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helia briaud
Helia Briaud
Offshore Analyst
Published on
April 29, 2024
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