The Offshore Wind Power Has A Broad Space for growth, and the Submarine Cable Industry is Growing Strong
The Wire and Cable Market is Wide with Market Segment Growing Rapidly.
Wires and cables are the indispensable basic equipment for transmitting electric energy and information as well as realizing electromagnetic energy conversion. According to product use, it can be divided into power cables, bare wires, cables for electrical equipment, winding wires, communication cables, and optical cables.
From 2015 to 2020, the sales revenue of China's wire and cable industry showed a fluctuating trend, and then the industry scale declined due to the reduction of production capacity in the manufacturing industry. With the acceleration of China's investment in new energy, the industry has begun to recover slowly. In 2020, the sales revenue of wires and cables reached 1.57 trillion RMB, with a year-on-year increase of 12.14%. According to China Wire & Cable Network & Insight and Info, the sales revenue of wires and cables is expected to reach 1.90 trillion RMB by 2024, with a compound growth rate of 4.89% from 2020 to 2024. Submarine cables are an important part of the construction of offshore wind power projects. They undertake the function of transmitting electricity to the onshore power grid. According to 4C Offshore data, China's submarine cable delivery has increased from 158km in 2014 to 2,904km in 2020, with an average annual compound growth rate of 62.45%.
The Trend Towards Carbon Neutrality is Clear. The Era of Offshore Wind Power Parity is Coming with Broad Room for Growth.
From the perspective of offshore wind power development, 2021 is the last year of state subsidies for offshore wind power. Affected by this, there will be a rush to install offshore wind power projects. The newly installed capacity throughout the year is 16.90GW, with a year-on-year increase of 452.29%. In 2022, we will usher in the era of offshore wind power parity. Although the cost of the sea breeze is relatively high at present, the economy of sea breeze operation can be improved by reducing the consumption of raw materials and the cost of installation, operation, and maintenance through the large-scale units. Also, the power generation efficiency can be increased through the remote sea. Other measures such as consume nearby, reduce transportation costs, and reduce local sea breeze subsidies can improve the economy of sea breeze operation. The real ‘parity’ can be expected.
The Submarine Cable Industry Has A Broad Space for growth, and the Ultra-high Voltage/Flexible DC Transmission Solutions Are Gradually Infiltrating the Industry.
Assumptions are made on the installed capacity, construction cost and proportion of submarine cables cost during the "14th Five-Year Plan" period. It is calculated that the market size of submarine cables will increase from 9.056 billion RMB to 34.974 billion RMB from 2022 to 2025, with an average annual compound growth rate of 56.89%. Under the trend of upsizing, far-sea, and large-scale, due to economic considerations, the sea breeze transmission project plan will gradually shift from 35kV AC + 220kV AC combination to 66kV AC + 330kV AC combination or 66kV AC + 500kV AC combination. Large-scale and long-distance projects will even adopt high-voltage flexible DC transmission solutions.
The Submarine Cable Industry Has High Barriers to Entry.
1. Qualification Certification Barriers
It generally takes more than one year to complete the type test and prequalification test before the submarine cables are put into use in China.
2. Technical Barriers to Production
The environment where submarine cables are located is complex, and the requirements for material selection, structural design, production process, and quality control are high. In addition, the ultra-high voltage or flexible DC transmission solutions puts forward higher requirements on the production technology experience and soft joint technology of submarine cable enterprises. Enterprises with relevant achievements in the past are expected to quickly enter the ultra-high voltage and flexible DC transmission submarine cable market and obtain a higher share.
3. Equipment, Terminal and Financial Barriers