INTERVIEW: Nexans gears up for massive growth in offshore wind cable market – S&P Global

Highlights

Big expansion at Halden factory

UK content via local presence, partnerships

Commodity price pass-through to customers

Nexans is gearing up for 250% growth in the offshore wind cable market to 2030, company officials told S&P Global Platts Sept. 16.

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The French cable company has been involved in around half of Europe's 25-GW of offshore wind development to date, providing high voltage subsea export cabling services to Belgian, Danish, German, UK and now French projects.

It has just launched the CLV Nexans Aurora, a cable laying vessel with over 10,000 mt of load capacity charged with deploying near-term projects such as Seagreen offshore wind farm in Scotland, the Crete-Attica interconnector in Greece and the Empire offshore wind project in the US.

Now the company is investing to expand capacity at its Halden factory in Norway, and its Charleston factory in North Carolina in the US.

Those decisions, and a strategic shift to focus on electrification, were driven largely by the massive growth trend in offshore wind and large interconnectors worldwide, said Maxime Toulotte, Nexans head of technical marketing.

Charleston is to be upgraded so it can supply submarine HV cables to the US offshore wind market, while at Halden "we are investing to increase capacity for AC and DC cables for offshore, close to doubling capacity," Toulotte said.

There was no plan, however, to build a factory in the UK despite the offshore wind industry's 2019 deal with the government to source 60% of content from the UK by 2030, including increases in the capital expenditure phase.

"Over the last five years we have been very successful in the UK with Beatrice, East Anglia and Seagreen project awards, but the type of investment [in a cable factory] and the time it takes for qualification is very massive," Toulotte said.

"It is complicated to have several factories in the same market. Our approach has been to have a local presence in the UK, especially in Scotland where we have project managers, site managers, jointers all performing field tasks. That gives us a long-term relationship with sub-contractors, notably for civil works. Having this local presence is a success factor in securing and performing UK projects."

Around 10% of an offshore wind farm's economic value was in the transmission asset, Toulotte said.

Transmission was an essential but quite a small component in the overall capital cost compared to turbine, blade and foundation manufacturing.

"On a more structural basis, our main partner in lead, usually employed in submarine cables, is based and produces in the UK," said Christophe Allain, Nexans global portfolio director non-ferrous metals.

"It is a good asset for the UK because we employ lead in all our high voltage facilities in the world," Allain said. However, the main materials in terms of cable value, copper and aluminum, could not be sourced in the UK so getting to 60% content "required more analysis of how you manage that," he said.

Customers were beginning to ask Nexans to define UK content and, more generally, its emission reduction efforts, Toulotte said.

"It is a big job to map entire projects, but we are starting to do it and in future this will be a systematic process," he said.

NEXANS: SELECTED HV CABLE PROJECT WINS

Seagreen

Offshore wind

UK

Hornsea 1 and 2

Offshore wind

UK

Saint Brieux

Offshore wind

France

Empire Wind

Offshore wind

US

DolWin 6

Offshore wind

Germany

Horns Rev 2

Offshore wind

Denmark

Belwind

Offshore wind

Belgium

Mindanao Visayas

Interconnector

Philippines

Mallorca Menorca

Interconnector

Spain

NordLink

Interconnector

Norway, Germany

North Sea Link

Interconnector

Norway, UK

Monlta

Interconnector

Montenegro, Italy

Inner Oslo Fjord

Interconnector

Norway

Maritime Link

Interconnector

Canada

Stair of Belle Isle

Interconnector

Canada

Malta-Sicily

Interconnector

Italy

Mallorca-Ibiza

Interconnector

Spain

Skagerrak 4

Interconnector

Norway, Denmark

Nexans hedges all its copper, aluminum and lead on the LME and it sells cable with a floating commodity price, Christophe Allain said.

"That is the market practice in the cable industry. We associated ourselves to the LME more than a century ago in order to do this. Changes in the commodity cost are borne by the customer, and we do not speculate or take a position."

On the wider impacts of high commodity prices and potential supply bottlenecks, Allain took a pragmatic view. "We have to be careful about what we read in the news. Growth in renewables won't come all on day one, it's a long-term process."

The full impact of the requirement for more copper would come in 3-4 years' time but today "it depends on what you call copper scrap is plentiful, cathode is available," Allain said.

There were some bottlenecks in more transformed products, and clearly there would be more demand for copper and aluminum, "but we are vertically integrated, we have our own copper rod mills. That gives us good security of supply," he said.

Nexans used 460,000 mt of copper in 2020, down from 525,000 mt in 2019 and 495,000 mt in 2018.

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INTERVIEW: Nexans gears up for massive growth in offshore wind cable market - S&P Global