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Future of submarine cable market faces supply strain

February 12, 2013 | By Alyssa Dalton

February 12, 2013 – Demand for submarine cables for electricity transmission is growing, as national governments and regional organizations ramp up efforts to build offshore renewable power generation facilities, link remote landmasses, and interconnect their national grids—however, this growth will be impossible to realize using only the current, already strained, channels of supply, says Pike Research.

The report, Submarine Electricity Transmission, analyzes 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. One of the report’s main findings in that even the most conservative models of existing and planned cables show the industry will continue to experience substantial growth.

“Purchasers and developers have proposed installing an additional 6800km of high-voltage submarine cables in almost 70 new projects around the world over the next six years,” said 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 said 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, he said.

The current supply chain is only capable of fulfilling half of the planned cables over the next five years, the report concluded, adding, “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”.

In an effort to respond to projected shortfalls, the report noted 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, it stated. 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 found.

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