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Drive for energy independence fueling demand for Prysmian cable technology

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Drive for energy independence fueling demand for Prysmian cable technology

Efforts to increase energy independence in countries around the world and the outbreak of several conflicts are driving growth in the power cables market and fueling a surge in orders for Prysmian’s cable technology for renewable energy and electricity connection projects, said Transmission Vice President Hakan Ozmen.

This rise in demand for more reliable electricity access is set to boost earnings in Prysmian’s transmission segment with its adjusted EBITDA expected to increase to around €600 million by 2027 from the €300 million achieved in 2023, as it races to increase manufacturing and installation capacity, said Ozmen.

“The market shifted at the end of 2021 and the start of 2022. The Covid pandemic and then the war in Ukraine have triggered a move towards energy independence in a lot of countries, which has added even more momentum to the energy transition. The explosion of orders and demand for interconnectors and offshore wind has started. And this trend towards energy independence will continue.”

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Hakan Ozmen

Transmission Vice President

Countries are investing in more renewable energy production sites and power links to boost their national security and to ensure they are less reliant on energy from abroad, thus shielding themselves from the risks posed by conflicts and global energy price volatility.

The global submarine power cables market is now worth about €30 billion in annual revenues, Ozmen said, while before the pandemic it had a value of around €3 billion. Europe is still the main driver of growth in the sector but several projects are also in the pipeline in the US, where the market is recovering after a slowdown due to a rise in project costs.

“The US was not prepared for inflation, and all of the states were very quick in tendering projects. Inflation went so high that many of those committed to projects threw in the towel and cancelled them. But now they are participating in the retenders and the retendering looks much better, the market is coming back,” Ozmen said.

Prysmian is seeing the average value of its projects increase, and in today’s market it is often signing contracts in the €2 billion-€5 billion range.

Among Prysmian’s most significant projects at the moment is the submarine interconnection Tyrrhenian Link that will allow power connection between the islands of Sicily and Sardinia and the Italian mainland. In the US meanwhile Prysmian is working on the nation’s largest offshore wind project, Dominion Energy’s Coastal Virginia Offshore Wind (CVOW). It is also involved in ADNOC’s offshore electrification project in the United Arab Emirates and in the submarine interconnector project between Saudi Arabia and Egypt.

In France it is completing a series of inter-array projects, in the Netherlands the company has started on the IJmuiden Ver Alpha offshore grid connection system and in Germany it is continuing its involvement in the German HVDC projects that will transport green energy from the north to the south of the country.

Demand is particularly robust for Prysmian’s new 525 kV High Voltage Direct Current (HVDC) cable systems. These are qualified with two different insulation materials, P-Laser and XLPE, which are both designed to operate at very high electrical stresses and to maximize power transmission over long distances with minimized land use.

“525 kV is the new standard. It’s the new cable, the new technology. We have an order book of more than €20 billion, and I can say that about 60% to 70% is 525 kV,” said Ozmen, adding that the first cable of this type is due to be installed towards the end of 2024 in the German HVDC cable projects.

He said floating wind farm cable systems were also an emerging technology, but the outlook on that front was more mid-term. Demand for existing technologies is so high that the newer technologies, aside from 525 kV, are likely to be deployed a little later.

Prysmian is working to meet the growth in its orders also by hiring new people. The Transmission segment is expanding from around 300 white collar workers in 2019 to more than 1000 this year, Ozmen said.

“We are growing significantly. The idea is to grow in a controlled way, and the growth can create career opportunities,” he said.

The value of Prysmian’s projects in execution expected to triple from 2021 to more than €30 billion by 2027, by which time the company will have invested €1.7 billion to meet this demand. Managing this blistering pace requires laser focus.

“We believe that we will do well this year,” said Ozmen. “We have promised, and we always deliver.”