Demand for HV and EHV subsea cables declined following the economic crisis in 2008, but rebounded in 2010 and 2011 as shown Slide 5.
In the last four to five years, wind power projects were concentrated in the Americas and Western Europe and were all of significant size. More than half of the projects were driven by an increase in renewable energy capacity as national utility companies connected offshore wind farms. Early examples include the Thornton Bank and the Thanet offshore wind farms linked to domestic power grids. Due to high energy prices and targets on renewable energy generation, renewable energy sources, such as wind power and hydro power, have become increasingly popular where geographical factors allow. The need to connect these sources to main grids will continue to remain a significant driver for the HV/EHV submarine power cable market in the coming years. In 2008 to 2009, this counted as the biggest driver of the global market (54%).
A number of projects were designed to connect the power supply on an island to that on the mainland in order to ensure the reliability of power supply. This was the second largest driver (23%) for the submarine power cable market. These power transmission projects for isolated islands are often constructed in line with urban plans to develop local tourism or business parks, and are especially common for Asia and the Middle East, but also in the Mediterranean. There are also larger projects to connect the grids of different countries, for instance, the NorNed link between Norway and the Netherlands. This is mainly to tackle energy price volatility, improve power supply reliability and allow access to renewable energy. When we look further into the period 2010 to 2015, these projects are becoming increasingly popular particularly in Western Europe. From a business perspective, efficient electricity connection often improves profitability because of lower energy costs.
A May 2010 article in the NY Times highlighted the proposed underwater Champlain-Hudson cable proposed by Transmission Developers, a Torontobased company. The plan proposes to deliver to the New York City metropolitan area, including crossing Long Island Sound and transiting to Connecticut. A major challenge in building overheadtransmission lines is resistance to new towers/lines being installed in local communities. This stance has been labelled, “not in my backyard” or NIMBY. The Champlain-Hudson cable would be installed for virtually the entire length (595 km) of the Hudson River, although along certain sections where industrial chemicals are known to have saturated river sediment, the cable will be installed along railroad rights-of-way that run on the east side of the river. The cable also will come ashore to avoid spawning areas for some species of fish.
Typically undersea power cable projects cost the equivalent of $15 million per kilometre. A significant portion of the cost covers equipment that transforms electricity to direct current, a form that is required for efficient long distance underground or subsea transmission. In comparison, power lines hung on towers run from $1.6 million to $6.4 million a kilometre, depending on terrain and other factors.
Cost notwithstanding, underwater power cables can provide a net benefit when considering the big picture. The same NY Times article cited the 85 km Trans-Bay power cable installed from San Francisco to Pittsburg in Contra Costa County across the San Francisco Bay (see Slide 6). Built by Prysmian this cable allowed old power plants that burned natural gas to be retired.
In March of this year Israel and Cyprus announced a feasibility study to construct a subsea power cable between the two countries that would simultaneously guarantee their mutual energy security and offer Israel a channel to export energy to Europe.
The Israel-Cyprus leg, with an estimated cost of half a billion Euros ($660 million),
would eventually be part of a much longer cable continuing to Greece and interconnecting from there to European electricity grids. If approved, the EuroAsia Interconnector will stretch 1,000 km and be installed at a maximum depth of 2,000 m according to DEH Quantum Energy, a consortium of Greece’s TSO, PPC, Cyprus's Quantum Energy and the Bank of Cyprus. DEH signed a memorandum of understanding with state-owned Israel Electric Corp (IEC) in March 2012 initiating a feasibility study that should be completed by year end. The cable itself will take three years to build and install.
Surrounded by Arab countries, Israel transmission system lacks interconnection agreements with its neighbours that are common in other markets. The cable reportedly will carry 2,000 megawatts in both directions, allowing Israel to sell electricity when production is high and have a back-up when reserves drop. Israel recently discovered huge deposits of natural gas in the eastern Mediterranean and is studying ways to export much of the reserves once the offshore fields begin production in the coming years. Israel stands to suffer from energy blackouts as power usage has climbed.
Cyprus has reported its own natural gas discovery and last month opened a second hydrocarbons licensing round, offering 12 offshore blocks for potential exploration.
REE (Red Eléctrica de España), Spain transmission system operator is building a 90 million Euro high-voltage (HV) submarine power cable spanning 115 km between the Islands of Mallorca and Ibiza. This project is part of REE’s investment to interconnect the Balearic Islands with the Iberian Peninsula to guarantee and improve the reliability of the electricity supply on the Islands. Supplementary benefits include improved efficiency, higher operational savings and reduced emissions.
Last year REE invested in the ROMULO project, a 400 MW high-voltage direct current (HVDC) link of 240 km between Spain’s 400 kV grid and Mallorca. In this new contract, the connection to Ibiza will be extended by constructing a 132 kV AC submarine cable featuring XLPE insulation. Nexans, the cable supplier in both REE projects, said the 100 MW link will establish two world records for both the longest 3-core highvoltage AC connection and the deepest deployed such cable, at an installation depth of 750 metres.
With more than 76% of its domestic proved oil reserves in large, contiguous and highly productive fields in the offshore Campos Basin, Petroleo Brasiliero or Petrobras is one of the global leaders in deploying offshore cables. In 43 years of developing Brazil’s offshore basins, Petrobras has developed expertise in deepwater exploration and production to benefit oil fields in both Brazil and in other offshore oil provinces.
To support this growth, Petrobras has ordered the construction of 22 new FPSOs (Floating Production, Storage and Offloading) platforms and 33 drilling rigs and also investing in new infrastructure. The company has planned capital expenditures and investments of US$ 50.6 billion in 2012 and of US$ 224.7 billion from 2011 through 2015.
Petrobras say it operates more production (on a barrel of oil equivalent (boe) basis) from fields in deep and ultradeep water than any other company. In 2011, offshore production accounted for 89% of its production and deepwater production accounted for 77% of its production in Brazil. The company is increasing the number of its deep water rigs, capable of drilling in water depths greater than 2,000 meters (6,560 feet) from 19 at year-end 2011 to have 33 by 2013.
Brazil’s oil wealth has attracted foreign investment from Sinopec, which helped finance a 900 mile natural gas pipeline in May 2010. In 2009 the China Development Bank loaned Petrobras US$ 10 billion to help develop its vast offshore oil reserves in exchange for future oil supply.
Brazil’s role as a leading undersea oil producer has meant on-going development of power cables and umbilicals to support exploration and production. Both Furukawa and Prysmian, which are major optical and power cable manufacturers in Brazil are working to supply both subsea power and optical cables to meet challenges in bringing this oil to market.
Staggering debt loads and a need to generate cash are forcing some southern European companies, (chiefly from Spain and Portugal) to sell off assets acquiring prior to the 2008 economic crisis. The beneficiaries are cash-rich Chinese companies that are now gaining access to transmission assets in Brazil.
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