Cables – Could They Be The Bottleneck During the Energy Transition?

A technological innovation is only as strong as its weakest link. Evidence now points to a shortage of cabling to be a challenge in the energy transition. In Europe there are many interconnector projects that require a lot of cabling, including the Viking Link (UK-Denmark), Celtic Interconnector (France to Ireland) and Hansa Powerbridge 1 (between Germany and Sweden). In the USA new windfarms and long distance transmission projects are being commissioned. Last month the Biden administration green-lighted 98 turbine Ocean Wind 1 off the coast of New Jersey. Hitachi Energy’s SunZia project is a 550 mile HVDC link between New Mexico and Arizona, planned to deliver power in 2027.

The Neuconnect cable between the UK and Germany’s finish date has been put back four years to 2028. Construction started this year but delays have made implementation more difficult. These issues are mainly down to the difficulties in obtaining HVDC cable. Many other projects all over the world are experiencing similar shortages.

There are a number of reasons for this: there are only a few companies that can supply the cables, and the barriers to market entry for newcomers are high because of the technology investment to build these items. There is a lack of skilled labor available. Copper is in great demand globally. According to the International Copper Study Group (ICSG) the forecast is for a supply shortfall of 114,000 tonnes this year after a 431,000-tonne deficit in 2022. Although prices have been volatile, there is a tight market in this essential commodity. In addition, manufacturing cables is not easy: they have to be robust enough to lie on the seabed, so strands of copper or aluminum conductor need to be wrapped in several layers of protection and insulation, using different kinds of metals and plastics.

“With companies already pointing to long lead times for key pieces of grid equipment, lack of supply chain capacity could become a major bottleneck,” says Ben Backwell, chief executive of the Global Wind Energy Council.

The UK Financial Times predicts a 60% increase in demand for power cabling by 2035. Outside of China there are only main two companies specializing in this work: Nexans and Prysmian. They are booked up for years to supply the cables needed. Anticipating greater demand from the Americas, Nexans has upgraded its subsea cable factory in Goose Creek, South Carolina, the only plant of its type in the USA, to service the increasing demand for offshore wind cables. Nexans is also building a state-of-the-art cable-laying vessel capable of putting down four cables simultaneously, due for delivery in 2026.

Fortunately the increased demand has made other large companies look to come into the market. XLCC is planning to build an HVDC cable factory in Scotland. Japan’s Sumitomo Electric is also looking at creating a manufacturing facility in Scotland and Hitachi Energy are standardizing their processes to scale up production. “There are huge efficiency gains that can be made,” says Niklas Persson, managing director of Hitachi Energy’s grid integration business.

The copper shortage is possibly the most difficult to solve: there is a huge demand globally for every sort of electrical need: from household appliances, thru EVs, to large projects like transmission cabling. New finds of copper are rare and miners are finding the ore is of lower quality and more expensive to refine.

The implications of this challenge do not seem to be fully understood at government level. Perhaps they assume that the market will respond to demand. But that isn’t always the case with very expensive specialist manufacturing products like HVDC cabling, especially when the effects of a shortage of copper are factored in. What company would build a factory if the raw material necessary could not be obtained in sufficient quantity at a viable price? This is a potential bottleneck for the transition to net zero energy production.