Scotland is placing a significant bet on the future of renewable energy by investing in a £2 billion subsea cable factory, located in North Ayrshire. This project, set to begin construction on the site of a former coal-handling port, is a critical part of the country’s strategy to foster economic growth through the transition to net-zero energy. The factory will produce high-voltage direct current (HVDC) cables that are crucial for transmitting renewable energy, and its success could shape Scotland’s position in the global renewable energy supply chain.
Regeneration and Jobs in Deprived Areas
The factory, developed by manufacturing start-up XLCC, represents a key part of the regeneration efforts in one of Scotland’s most deprived areas. The goal is to create thousands of jobs and stimulate economic growth by attracting overseas investment. This aligns with both the UK and Scottish governments’ ambitions to replace jobs lost in the oil and gas sectors, which have long been a staple of the region’s economy.
Laura Fidao, investment director at the Scottish National Investment Bank (SNIB), highlighted that Scotland had previously failed to develop a domestic supply chain for offshore wind projects, instead relying heavily on imports. However, the new factory aims to reverse this trend, focusing on floating offshore wind projects—a sector poised to grow rapidly in the coming decades.
Subsea Cables: A Vital Component for Decarbonisation
The HVDC cables produced at the Hunterston site will be essential for connecting offshore wind farms to the national grid. These cables will also help reinforce grid infrastructure and facilitate international electricity transfers, such as the proposed subsea electricity interconnector between Morocco and the UK. The cables play a pivotal role in the UK’s decarbonisation plans, and demand for them currently outstrips supply by more than two-and-a-half times.
XLCC aims to begin commercial-scale production of these cables by 2030. The factory will support a capacity of 1,300km of cable per year, with the potential to expand to 2,600km annually. The global demand for these cables is expected to reach 10,000km annually by 2030. However, some industry leaders have expressed concerns about the company’s ability to meet the demand, given that it is a new player in the HVDC manufacturing market.
Overcoming Challenges and Risks
Despite these concerns, XLCC has already secured strategic partnerships with experts in HVDC manufacturing, including China’s Orient Cable. The company has also received substantial financial backing, including a £20 million investment from SNIB. However, challenges remain, such as the risk of delays in offshore wind farm rollouts, which could impact future orders for cables.
Scotland’s government is also focused on expanding its ports, such as the Ardersier port, which is being developed to support offshore wind projects. This is critical for assembling the infrastructure necessary to support Scotland’s offshore wind goals, which include a pipeline of 40 gigawatts of offshore wind projects that will require vast amounts of subsea cables.
Supporting Local Manufacturing and Innovation
In addition to boosting the local economy, the subsea cable factory represents an opportunity to strengthen Scotland’s role in the global renewable energy market. The Scottish government is working to incentivize renewable energy developers to source equipment locally. Future seabed lease agreements will include requirements for local supply-chain involvement, further driving demand for domestic manufacturing.
Gillian Martin, Scotland’s acting net-zero secretary, emphasized the importance of local supply chains in the success of these projects. She noted that the demand for locally-sourced materials and components would be vital for ensuring the long-term viability of Scotland’s renewable energy sector.
