The UK Infrastructure Bank (UKIB) has committed up to £87 million in potential funding to support the development of a new subsea HVDC cable factory in Hunterston, located on Scotland’s west coast. This strategic investment aims to address the increasing demand for subsea cables as the UK ramps up its offshore wind and marine energy projects.

The funding, which is directed towards Essex-based cable manufacturer XLCC, begins with an initial £20 million, with the option to unlock an additional £67 million as the company hits vital development and funding milestones.

This financial backing will enable XLCC to construct a state-of-the-art factory capable of producing thousands of kilometers of subsea cables annually. This is expected to bolster the UK’s clean energy infrastructure and create around 900 permanent jobs, including over 200 apprenticeships, offering a significant boost to the local economy.

The project aims to alleviate supply bottlenecks that could hinder the UK’s expanding offshore energy sector by increasing the availability of critical subsea cabling.

“Industry projections indicate that demand for subsea cables will soon exceed existing supply chain capacity,” said John Flint, UKIB CEO. “Our support for XLCC is intended to provide confidence to the market, crowding private investment into this sector to boost production capacity in an industry set to have a significant impact on the UK’s transition to net zero.”

The UKIB funding will be further bolstered by additional investments from existing and new investors, adding to the more than £40 million already raised by XLCC. This previous funding has been crucial in helping the company design innovative products to be manufactured at the site, obtain full planning permission, and advance the construction of the factory itself.

The subsea HVDC cables produced at the new Hunterston facility will transport energy over vast distances more efficiently. This technology is critical to ensuring that clean energy generated by offshore wind farms in the North Sea can efficiently be delivered to homes and businesses across the UK, significantly enhancing the country’s renewable energy infrastructure.

“XLCC’s mission is to provide critical elements of the infrastructure that is essential to the energy transition and will reduce project costs to the benefit of the UK consumer,” said Ian Douglas, XLCC CEO. “The creation of the Hunterston facility in Scotland brings significant investment to the UK, creating highly skilled jobs in advanced manufacturing and project management for decades to come.

“We welcome the foresight of UKIB and our other investors in recognising the opportunity to create a new force in HVDC cables to address both domestic and global requirements.”

Industry regulator Ofgem welcomed UKIB’s focus on increasing cable production capacity to support the expansion of the offshore wind sector.

“Britain is seeing the biggest transformation of the energy grid for decades,” said Jonathan Brearley, Ofgem CEO. “It will have long-term benefits for us all – true energy security, cutting emissions, and protecting consumers. It demands unprecedented levels of public-private investment in clean power, so we welcome the UKIB’s commitment today to green industry, jobs, and growth.”

The update coincided with construction on the £4.3bn Eastern Green Link 2 (EGL2) ‘electricity superhighway’ in Yorkshire. This 2GW subsea link will connect England and Scotland, stretching over 500 kilometers from Peterhead in Aberdeenshire to the Drax biomass power station in North Yorkshire.

Approved by Ofgem last month, the National Grid and SSE joint venture aims to support hundreds of jobs during peak production. The link, primarily expected to carry Scottish renewable energy to northern England, could power over two million homes when it becomes operational in 2029.

EGL2 is one of four subsea electricity links planned along the East Coast to ease grid pressure and reduce constraint payments, alongside the Eastern Green Link 1 project between East Lothian and County Durham.