Joined-up thinking as cable giant Prysmian eyes offshore growth

IN DEPTH | Market leader Prysmian expects the shift towards 66kV cabling technology will result in offshore transmission savings of 15% — and help it to a larger slice of the interarray and export-line market, writes Darius Snieckus

Technology has been a main engine in the cost reduction campaign that has driven the price of offshore wind energy from €150 ($164) per MWh to under €50/MWh in just a few short years, chiefly through the upsizing of its turbines. Now the cabling industry believes a similar impact will be made by the coming move to high-voltage (HV) interarray and export lines.

For Italian cablemaker Prysmian the timing could hardly be better. The Milan-based contracting giant — which has transitioned away from offshore oil and is responsible for manufacturing and laying most of the major power transmission infrastructure in Europe’s northern seas — has been investing and expanding in preparation for this moment.

Between 2012-16, the company splurged €200m building up a fleet of construction vessels, the Cable Enterprise, Giulio Verne and Ulisse, to give it an “all-water-depth” fleet of cable layers, with another €40m going into retooling its factories in Pikkala, Finland, Drammen, Norway, and Arco Felice, Italy, to handle production of industrial-gauge cables with voltages of up to 600kV.

The result has been an order pipeline bulging with more than 15GW of submarine cabling contracts either in the water or now in engineering, including three interconnectors — the 1.4GW UK-Norway North Sea Link (NSL), 700MW Netherlands-Denmark Cobra and 1GW Interconnexion France-Angleterre 2 — and the lead-off export lines from France’s first 1.5GW of offshore projects.

The company has also been hard at work on 66kV cabling concepts — the technology expected to soon supplant the 33kV lines that are now the industry standard. The prize for Prysmian could be revenue from the less heavily inked column in its orderbook — interarray cables — a market that could be worth as much as €1.5bn a year over the next decade.

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“Until the eruption of offshore wind, the submarine cable market was TSO-[transmission system operator] based. Interconnectors only. [Current Prysmian projects for] Western Link [between Wales and Scotland], Cobra, NSL lines — these are natural territory to us,” says Raul Gil, chief operating officer of Prysmian’s submarine cable business.

“Now there is a new group of customers — developers [such as] Dong, Vattenfall, SSE. These are not traditional customers for submarine cables. This is a rapidly evolving industry; customers are changing, though it is true that many of the products are much the same. So, we have to reshape our selling proposition to meet these customers’ demands.” The core of which is 66kV.

“The market as of today still hinges on 33kV technology. Most of the tendering, though, is with 66kV. Until 2016, we had a question mark over what the future of the interarray market will be. But after the last year, to us it is 100% clear that the market is shifting towards being dominated by 66kV. This will mean lower cost — ultimately — for utilities and their consumers, but it will also mean that industry manufacturing and development set-ups will have to be adapted to this kind of cable.”

Prysmian’s belief in the high-voltage future of offshore wind led it to develop an HV line — a three-core, 66kV “wet-design” cable system — that is expected to cut the cost of offshore wind interarray networks by 15%.

And it sparked the decision to beef up its UK production facility in Wrexham, Wales, to manufacture both 33kV and 66kV cabling, building on the HV production capacity in Pikkala and Arco Felice.

“Our Finnish and Italian factories have already been adapted to meet this reality, and if necessary [we] will adapt our Norwegian factory as well, and also expand our Wrexham production facility to manufacture both 33kV and 66kV cabling. We are keeping our investment promises — we are investing in new capacity and new capabilities,” says Gil, noting the “industrial fit” with the company’s offshore logistics hub in Middlesbrough, northeast England, which serves as a base for its Cable Enterprise cable-laying vessel and range of cable-burial and protection equipment.

The UK base is more than just another factory. It will be Prysmian’s European offshore wind HQ — close to a domestic market that is evolving for the better as the “market forces and not the wishes of politicians” determine the stability of the sector.

“We believe in this market more because of the new auction prices we are seeing off the Netherlands, off Denmark [even before the zero-subsidy awards to Dong Energy and EnBW off Germany],” says Gil. “This makes us very optimistic. The offshore wind industry is increasingly delivering more and more competitive energy prices, so it is a sector which we believe in more and more. We believe we are on the right path to move past subsidies. We are committed to that.”

Analysts believe the cable market will slow in 2017-18, before rebounding strongly towards 2020 — a prediction that Gil broadly agrees with. “What lies ahead in the next couple of years has already been decided, if you like,” he says.

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One bet Prysmian is making on the European market is a further shift towards integrated deliveries for offshore infrastructure, not just the cable and installation vessel, but “one-stop shops”. “We want to have everything in-house,” says Gil.

“It is important to understand projects as being made up of three parts — manufacturing, laying and protection. On manufacturing, we have dedicated Drammen to interarray cables, we have double our capacity for export cables at Pikkala, and we are offering the market 66kV for the biggest projects now on the way. On laying, we have invested in our vessel fleet — the Giulio Verne, the Enterprise, the Ulisse.

The conspicuous absence of a vessel tailored for interarray assignments is something Prysmian is “working on”, says Gil, though he highlights the success of its cable-laying on Iberdrola’s 350MW Wikinger wind farm as an example of where its shallow-water Ulisse barge can do the job on interarray hook-up. “And we are further developing our cable trenching and protection capabilities, too.

“As well as our successes with export-cable orders and interconnectors, we are fighting hard on the interarray projects as a turnkey supplier. There are longer-term ambitions.”

France is one of those. The €300m-plus contract from France’s TSO, Réseau de Transport d’Électricité for the 220kV HV export lines for the first three French offshore wind farms — Fécamp, Calvados and Saint-Nazaire — is a strong start. But it is the multi-gigawatt future of France’s offshore horizon that is glowing brightly on the radar.

"We cannot know what the impact of Brexit will be but right now, the UK looks like the centre of the interconnector universe"

“This [contract] was of paramount strategic importance and this is a new and very promising market when we look forward into the 2020s,” says Gil.

“The French projects are rather more challenging than some others, being in open water in the Atlantic and involving very hard seabed conditions. But you know, these sorts of projects make us strong. When the projects are difficult, we are more competitive.

“And France wants to have 6GW installed [by 2020] and then there is also floating wind coming [starting in 2020 with the commissioning of the first utility-scale pilot projects],” he adds.

The general industrial uncertainties faced by a still-young European offshore wind market are not being made that much more complicated by Brexit, Gil notes. He is less certain of forecasting the impact of the UK’s Contracts for Difference (CfD) tenders.

“We cannot know [what the impact of Brexit will be on the UK’s electricity connections to Europe] but right now, the UK looks like the centre of the interconnector universe. The business case is clear.

“The UK market, with the new tendering mechanism, is becoming a little more difficult to forecast — until the CfDs are awarded you cannot really know where the market will be going. We have hopes to have more success here [with the Round 3 projects’ interarray and export cables].”

“But we believe in sustainable and steady growth of the [European] offshore wind market over the next five to ten years — we are optimists on this market. 

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