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Subsea cables, the backbone of our communications and energy, are enormous: nose to tail, they’d wrap round the globe 37 times. But even that is nowhere near enough. The green transition — which for many places means relying on far-off sun and wind — has stuffed some cablemakers’ order books, and lifted their shares.
There are still knots to untangle. Cables are vulnerable to everything from sabotage to the shifting seabed. Investor sentiment is shifting too, after November’s elections installed Donald Trump, no friend of renewable energy, as US president.
Since then, shares in French cablemaker Nexans and Danish peer NKT have fallen. Italy’s Prysmian, the biggest, fell sharply last week, caught up in the energy sell-off triggered by a Chinese start-up’s strides in creating less power-intensive AI. More quietly, Prysmian ditched planned, and long-stalled, projects in the US.
Europe remains gung-ho on renewables like wind, which are powering demand. Cables bring offshore wind power on to land, or allow countries to pass on — or receive — surplus energy, such as the Nemo link connecting Belgium and the UK. The European Commission wants members to have interconnectors in place to enable transport of at least 15 per cent of their capacity by 2030.
More ambitious still, come 2030, start-up Xlinks aims to pump solar energy from sunny Morocco through 4,000km of subsea cable, ultimately meeting 8 per cent of the UK’s electricity needs and keeping lights on when the home winds drop. The required £20bn investment sounds like a pipe dream, but then so does the UK’s bid to have 50MW of offshore wind power by 2030, a more than threefold increase.
That points to the second big cable snag. Can Europe actually deliver its green ambitions, and over what timescale? The power industry is an unhelpful mish-mash of public and private sectors with different aims. The UK’s 2023 contract for differences auction, effectively setting prices, drew precisely zero bids from offshore wind farm developers: none could make the math stack up.
Politics, too, creates choppy waters. Russia’s full-scale invasion of Ukraine, which exposed Europe’s reliance on Russian gas, prompted the need to diversify energy supplies — including from renewables. But much of the technical cable expertise, and some capital, is coming from China, a potentially hostile actor.
Still, cablemakers are not in a bad spot. They are big. They are vital to the long-term trajectory of the energy system. And they have a lot of work already in the pipeline. While investors may be reluctant to dive in, this is a sector that will be hard to ignore.
louise.lucas@ft.com
