The UK Infrastructure Bank (UKIB) yesterday ringfenced a potential £87m of investment for a new subsea HVDC cable factory in Hunterston on the west coast of Scotland.
The funding for Essex-based cable manufacturer XLCC consists of an initial £20m with an option of a further £67m upon the company achieving specific development and funding milestones.
The UKIB financing will help XLCC develop a factory with capacity to produce thousands of kilometres of subsea cabling each year and is expected to create around 900 permanent jobs, including more than 200 apprenticeships.
The project also aims to help tackle potential bottlenecks in the supply of cables for the UK’s growing fleet of offshore wind and marine energy projects.
“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 complemented by further investment from existing and new investors and builds upon funding of more than £40m raised by the company to help it design new products to be built at site, secure full planning permission, and deliver the factory itself.
Subsea HVDC cables built at Hunterston will be capable of transporting energy over long distances with significantly increased efficiency and will allow the clean energy produced by wind farms in the North Sea to be transported to homes and businesses around the country.
“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 also welcomed the UKIB’s focus on boosting cable production capacity in support of the expansion of the offshore wind industry.
“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 came on the same day construction work on the £4.3bn Eastern Green Link 2 (EGL2) ‘electricity superhighway’ began in Yorkshire to connect England and Scotland via a 2GW subsea electricity link.
Ofgem gave the go-ahead for the multi-billion-pound high voltage link covering more than 500 kilometres from Peterhead in Aberdeenshire to the Drax biomass power station in North Yorkshire last month. It’s hoped the joint venture by National Grid and SSE will support hundreds of local jobs in Yorkshire at peak production.
Although the link can carry electricity in both directions, the majority is expected to flow from Scottish renewables projects to cities in northern England. SSE has estimated the cable could provide electricity to more than two million homes after it becomes operational in 2029.
EGL2 is one of four subsea electricity links being planned along the East Coast in a bid to alleviate pressure on the energy grid and reduce constraint payments to renewables generators, including the Eastern Green Link 1 between East Lothian and County Durham that is being planned by National Grid and SP Energy Networks.
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