The global submarine high-voltage/ultra-high-voltage cable market will grow by 22% CAGR from 2020 to 27

According to the British commodity research institute CRU, as of 2020, the total demand for submarine high-voltage/ultra-high-voltage cables, including those related to offshore wind farms and submarine interconnections, accounted for about 22%
of the total global high-voltage cable and ultra-high-voltage cable market.

Submarine cable demand is expected to be significantly boosted by a surge in global offshore wind capacity, with CRU projecting subsea HV/UHV cables to account for more than 42% by 2027, at a CAGR of 22%
between 2020-2027.
This booming market is increasingly of interest to global power cable producers, as reflected in recent announcements, capacity expansions and investment priorities by major producers
.

For many wire and cable manufacturers, it is undoubtedly an unforgettable year
.
The Covid-19 pandemic and associated economic weakness have led to a sharp decline
in global cable demand.
During this challenging period, the HV/UHV cable industry is once again performing better
.
In fact, CRU estimates that demand for low/medium voltage power cables fell by 5.
7% last year, but total HV/UHV (onshore and subsea) actually grew, up 4.
7% year-over-year in terms of conductor tonnage and 2.
9%
by core.

In terms of demand growth in core kilometres, despite the recession caused by the global pandemic, it was submarine cables
that stood out in 2020.
In fact, CRU estimates that the subsea high/ultra-high voltage cable market will grow by more than 35%
in 2020.
The rapid growth of submarine HV/UHV cables can be attributed to a number of unique market factors, such as a relatively small base, as well as longer lead times and higher levels of overall funding
.

According to data recently compiled by Bloomberg New Energy Finance, offshore wind financing totaled US$35 billion in the first half of 2020, up 319% year-on-year and well above the record full-year figure of US$31.
9 billion
in 2019.
In the first half of the year, investment decisions were made in 28 offshore wind farms, which bodes well for future cable demand
in this end-use sector.

The increase in investment and project incentives in the offshore wind industry is reflected in the increase
in producer subsea backlogs.
For example, Prysmian and Nexans, the world's two largest cable giants, had a backlog of orders worth $3.
3 billion worth of submarine high/ultra-high voltage cables at the end of the third quarter of 2020.

As renewable energy technologies mature, their costs continue to fall, making them a competitive alternative
to fossil fuel power plants.
This, combined with the Paris Agreement's commitment to reducing greenhouse gas emissions, has led to a surge
in deployments.

The increased competitiveness of renewable energy shows a continued decline in the levelized cost of electricity (LCOE), a measure
of the average cost of generating electricity over the life cycle of a power plant.
In fact, solar PV and offshore and onshore wind energy are both in the fossil fuel cost range, indicating similar energy costs
.

This is driven
by improved technology, economies of scale, a growing developer experience, and an increasingly competitive supply chain.
The decline in wind LCOE is due to the use of larger wind turbines, which means lower
foundation, maintenance and wiring costs per kWh.
Lower costs and policy priorities towards decarbonization have led to a boom
in renewables compared to traditional energy sources.
In fact, according to IRENA, renewables accounted for 72%
of all new capacity additions in 2019.

Offshore wind is by far the most important type of
renewable energy to meet the demand for HV/UHV cables.
It is the only type of renewable energy that always requires high-voltage cables and often uses ultra-high-voltage
cables.
On the other hand, onshore wind and solar photovoltaic power plants occasionally use high-voltage cables for grid connection, while overhead conductors
are also widely used.

Offshore wind applications use HV/UHV cables primarily consisting of output cables that carry power from offshore substations to the onshore grid
.
The total distance can be more than 5-100 km, depending on the location of the offshore wind farm; The second is array cables, which connect each turbine to the offshore substation platform; and connecting cables
between platforms or connecting offshore substations to offshore transfer station platforms.

CRU believes that during the period 2021-2027, output cables will be the largest offshore wind end consumer
of HV/UHV cables.
CRU expects the number of offshore wind farms to triple between 2021 and 2027 to 309 by 2027
.
This reflects an average of 29 new offshore wind farms
being added each year.
This forecast is broadly in line with the Global Wind Energy Council's forecast of 146 GW of global installed capacity in
2027.

Europe and China (in this case, Chinese mainland) will remain the main markets in terms of the location of offshore wind farms in the future, accounting for 57% and 24%
of new installed capacity respectively.
This is down from their historical share, reflecting the growing importance of
the U.
S.
and Taiwanese markets.
More specifically, the U.
S.
and Taiwan are expected to account for 12% and 5%
of the future market, respectively.

Factoring in the submarine interconnection market, CRU estimates that the total demand for submarine high-voltage/ultra-high-voltage cables will grow
at a CAGR of 22% during the period 2020-2027.
Among them, the demand for submarine cables related to the offshore wind industry will grow
at a faster CAGR of 27% over the same period.
This includes submarine cables
for output, array, and platform-to-platform applications.

Due to the continuous replacement of medium-voltage array to high-voltage array cables, array cables have the highest growth rate, with a compound annual growth rate of 66%.

In fact, if we add high/medium voltage array applications together, the segment will grow
at a CAGR of 18% over the forecast range.
Overall, the offshore wind industry's demand for HV/UHV cables in the period 2020-2027 will be 5.
6 times
higher than in the 2014-2020 period.

By region, the European offshore wind industry has the largest demand for HV/UHV cables, while North America is growing the fastest
.
More specifically, European demand will be driven
by a strong pipeline of projects in Germany, the UK, Belgium, France and the Netherlands.
North America's high growth rate partly reflects its current smaller market size and large project pipeline in the U.
S.
, with 24 offshore wind farms expected to come on stream
during the forecast period.

2020 was a record year for China, which accounted for half of all new offshore wind installations globally
.
The high level in 2020 pulled China's medium-term CAGR (2020-2027) down to 15.
4%, compared to 23.
7%
CAGR from 2019-2027.