Demand for submarine cables for electricity transmission is growing steadily, as national governments and regional organizations ramp up efforts to build offshore renewable power generation facilities, link remote landmasses, and interconnect their national grids.
Even the most conservative models of existing and planned cables show that the industry will continue to experience substantial growth. According to a new report from Pike Research, a part of Navigant’s Energy Practice, however, this growth will be impossible to realize using only the current, already strained, channels of supply.
“Purchasers and developers have proposed installing an additional 6,800 kilometers of high-voltage submarine cables in almost 70 new projects around the world over the next six years,” says chief research director Bob Gohn . “This is nearly double the level of construction during the previous five-year period. There are very few companies capable of performing each step in the installation process, from surveying to final installation.”
Gohn adds that the primary limitation on the growth of this industry is the constricted supply of the cables themselves. Only a handful of manufacturers are capable of delivering 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.
The current supply chain is only capable of fulfilling half of the planned cables over the next five years, the report concludes. Barriers to entry in this sector are steep, meaning that the submarine cable manufacturing market is unlikely to grow by leaps and bounds in the coming five years.
Responding to projected shortfalls, major manufacturers are expanding existing manufacturing plants, opening new facilities, and continuing to research better and more efficient methods for manufacturing the products required for high-voltage submarine cable deployments.
The development of a vibrant second tier of manufacturers that act as subcontractors to the major companies could also help offset the supply bottlenecks. Still, such upgrades to the supply chain will not be enough to keep up with demand if a majority of the planned cables comes to fruition in the next five years, the report finds.
The report,”Submarine Electricity Transmission”, provides a comprehensive analysis of the worldwide market opportunity for submarine HVDC and HVAC power cable projects, including an assessment of demand drivers and supply chain dynamics, both currently and in the years ahead.
The study features in-depth profiles of more than 25 key industry players and case studies of more than 30 notable high-voltage submarine cable projects. Market forecasts are provided for submarine cable projects through 2021, segmented by world region and including three different growth scenarios.
[mappress]
Offshore WIND staff, August 15, 2012; Image: TenneT