The Global Shortage of High-Voltage Electricity Cables: A Bottleneck for Clean Energy

The Complexity of High-Voltage Cables

• 💡 High-voltage electricity cables are essential for transporting power, with diameters up to 25 cm for subsea applications.
• 🛠️ The core of a cable is a conductor, made from twisted aluminum or copper wires, designed like a rope for flexibility.
• 🏗️ Insulation is applied in multiple layers within tall extrusion towers (up to 200 meters) to ensure a perfectly round shape, preventing deformation due to gravity.
• 🌊 Subsea cables require additional watertight seals (longitudinal and radial) and mechanical armoring to withstand pressure, weight, and seabed burial.

AC vs. DC Power Transmission

• ⚡ While grids traditionally use alternating current (AC), high-voltage direct current (HVDC) is increasingly favored for long-distance transmission due to higher efficiency.
• 🔋 AC cables act like capacitors, requiring constant charging and discharging, limiting their effective range to about 100 km for large-scale power transfer.
• 🔌 HVDC systems offer less loss, better power flow control, and the ability to perform black starts (restarting a dead grid).
• 📈 The prevalence of HVDC has surged in the last 5-10 years, now comprising 80-90% of major awarded projects.

The Cable Industry Bottleneck

• ⚠️ A significant shortage of cables is throttling the clean energy transition, with manufacturers hesitant to expand capacity due to the high cost and long-term commitment required.
• 🌍 The IEA estimates a need to build 80 million kilometers of grid infrastructure by 2040, equivalent to the entire existing grid built over the last century.
• 💰 NKT and other European cable manufacturers are investing billions to increase capacity, but require predictable, long-term demand from regulators and transmission system operators.
• 📉 Past experiences of demand not materializing after investments have made the industry cautious.

Manufacturing, Deployment, and Market Dynamics

• 🚢 Subsea cables are manufactured in much longer lengths (up to 10,000 tons on vessels) compared to land cables (50-100 tons on drums) due to transportation limitations.
• 💰 While subsea cables are more expensive due to added protection, the cost difference is not drastic, as the conductor remains the primary cost driver.
• 🇨🇳 Concerns exist about China's dominance in cable manufacturing, with fears of price dumping and a lack of strategic autonomy for Europe and the US.
• 🤝 Despite geopolitical risks, cross-border electricity trading is physically necessary for grid stability, though the paradox of long-term energy infrastructure planning versus short-term political cycles presents challenges.

Overcoming Challenges and Future Outlook

• 🚀 NKT is proud of projects like supplying clean hydropower to New York City, highlighting the critical role of advanced cable technology.
• 🏭 The cable industry has a deep moat, making it difficult for new competitors to enter, which can lead to past issues of price fixing and collusion.
• 📈 Despite challenges, the fundamental need for electrons for energy consumption and transport positions the industry for robust, long-term growth.