MRO Magazine

Technavio Announces Top Three Emerging Trends Impacting the Global Submarine Power Cable Market Until 2020


July 11, 2016
By Business Wire News

LONDON

Technavio’s latest report on the global submarine power cable marketprovides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.

According to Anju Ajaykumar, a lead analyst at Technavio for research on engineering tools, “The offshore wind power generation sector is the major end-user of submarine power cables. Utility companies deploy these cables for efficient transportation of electric power. The cables play a vital role from electricity generation to transmitting power, and finally transporting the power onshore. Rising investments worldwide to support renewable energy generation such as tidal turbine, wave energy, and offshore wind power generation will trigger a major demand for submarine power cables during the forecast period.”

The top three emerging trends driving the global submarine power cable market according to Technavio heavy industry research analysts are:

  • Volatile raw material price
  • Rise in sales of HVDC power cables
  • High R&D investment

Volatile raw material price

The primary raw materials used in manufacturing of power cables are aluminum and copper. Power cable vendors incur a major part of their manufacturing cost for acquiring these raw materials. As per the December 2015 pricing of these metals, raw material costs account for approximately 85% of the total production cost of submarine power cables. The total cost of copper and aluminum metals account for roughly 50% of the total production cost. Volatile prices of copper, aluminum, and other necessary raw materials, along with fuel and energy costs, lead to significant volatility in the cost of sales or revenue of cable manufacturers. Vendors try to recover from the pricing instability of metals through negotiated price changes in the final product.

Vendors can achieve a raise in their gross profit margins by increasing the final selling price to recover the cost of raw materials, provided there is sufficient demand for the product. If the vendors are unable to raise the amount due to stiff competition among market players, then their gross revenue decreases.

Rise in sales of HVDC power cables

The HVDC underground power cable is a viable option for long distance and high-voltage safe power transfer. The European Commission has selected 43 major energy projects to build cross-border infrastructure that can create a potential internal energy market and also enhance energy security. In these projects, high loads of electricity need to be transferred from one European country to another. HVDC cables are expected to become a viable option for such assignments in the coming years. In addition, the lightweight nature and dimensions of HVDC light cables make them a preferred option over their AC counterparts, especially in submarine power transmission.

High R&D investment

Rising investment in R&D is a key trend that will pave the way for future market growth of submarine power cables. Growing number of offshore wind energy installations is fueling R&D investments in the market. Different types of power cables are required for the transmission of power generated from these alternative energy sources. Vendors are focused on developing new technology that enables high-voltage power transmission over long distances without much energy loss. As the market is highly competitive due to the lack of product differentiation, vendors are trying to launch new products to differentiate themselves from their competitors.

Some of the changes in high and extra high-voltage cables include the following:

  • Wet design to dry insulation that benefits the environmental conditions around the cables
  • Lower electric stress to higher electric stress
  • Larger cable dimensions to smaller cable dimensions
  • Heavier cables to lighter cables
  • Shorter shipping lengths to longer shipping lengths

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

If you are interested in more information, please contact our media team at media@technavio.com.

Technavio Research
Jesse Maida
Media & Marketing Executive
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