According to a submarine power cable market research report published by Technavio, the global submarine power cable market demand is growing at a CAGR of around 5.89% during 2016-2020. Among these, fluctuating raw material prices, increasing demand for high-voltage DC cables, and increased investment in R&D are the three major emerging trends contributing to the steady increase in demand for submarine power cables globally.
By 2020, the offshore wind power industry is the most important end-use market for submarine power cables. Energy companies to increase investment in submarine power cables and construction is to further improve the effectiveness of power transmission, and ultimately to protect the land power supply.
At the same time, the global investment in renewable energy power increased, including tidal energy, wave energy, offshore wind power will continue to promote the growth of demand in this market.
Raw Material Price Fluctuations
The main raw materials used in the production of power cables are aluminum and copper. Cable itself is a material-heavy and light industry, so raw material price fluctuations have a very direct impact on cable manufacturers. As of December 2015, the cost of raw material prices accounted for nearly 85% of submarine power cable production costs.
The cost of copper and aluminum, on the other hand, accounted for about 50% of the total cost of production. As a result, fluctuations in the price of copper and aluminum and other necessary raw materials, coupled with fluctuations in the price of fuel and energy costs, have had a very significant impact on the cost of sales and revenues of cable manufacturers. For this reason, cable manufacturers have attempted to minimize the impact of metal price volatility through negotiated price changes in finished goods.
The report argues that an increase in gross profit margins can be achieved by increasing the selling price of finished products in order to reduce the risk of raw material price cost fluctuations, but only if the market for finished products is in short supply.
Increase in sales of high-voltage DC cables
High-voltage DC underground cables are a viable option for high-voltage power transmission over long distances. The European Commission has shortlisted 43 major energy projects to create cross-border infrastructure to realize a single energy market and improve regional energy security. In each of these projects large amounts of electricity are required to be transmitted from one European country to another. As a result, the European market will be the major demand market for HVDC cables by 2020.
In addition, features such as light weight and low loss make HVDC cables a more advantageous option than AC cables, especially in the submarine power transmission market.
Increased investment in research and development
The report argues that increased investment in research and development is to promote the future demand for submarine power cables a major reason for steady growth in the market. The rapid growth of the offshore wind power market has created more opportunities for R&D. Different alternative energy resources require different types of power cables to achieve stable power transmission.
Therefore, cable manufacturers will continue to increase investment in new cable technology to realize longer distance, lower loss of high-voltage power transmission.
Not only that, due to the serious competition of product homogenization, cable manufacturers continue to increase the research and development of new products, in order to maintain the competitiveness of enterprises.
The report also points out that the future development trend of submarine power cables (including high-voltage/ultra-high-voltage cables):
- Wet design to dry insulation change in favor of cable peripheral environmental conditions;.
- Low electrical stress to high stress shift;; and
- Large diameter sizes to small diameters; and
- Lighter cable mass.
- Short distance to long distance destination distribution.