Offshore Wind Accounts for 45 Pct of NKT’s High-Voltage Order Backlog

Business & Finance

February 21, 2024, by Adrijana Buljan

Subsea power cable manufacturer NKT has reported a record-high order backlog for high-voltage cables for 2023, with 45 per cent of orders coming from offshore wind.

At the end of last year, NKT’s order backlog was at EUR 10.8 billion, more than double the company saw at the end of 2022.

In its full-year 2023 results, the cable manufacturer states that this was “driven by the highest annual order intake in company history”. Orders for high-voltage projects that came in last year alone have a combined value of approximately EUR 7 billion.

Interconnector projects make up for around 50 per cent of NKT’s year-end order backlog, offshore wind projects around 45 per cent, and the remaining 5 per cent is in power-from-shore projects, with 75 per cent of all orders placed by large European transmission system operators (TSOs).

“Approximately 26-29% of the high-voltage order backlog is expected to be executed in 2024 and 2025, and the remaining balance in 2026 and beyond,” NKT says.

Among the company’s 2023 contracts are the three NKT secured with TenneT for delivering turnkey high-voltage power cable projects for Ijmuiden Ver Beta, Gamma and Nederwiek 2 offshore wind zones in the Netherlands.

Last year, NKT also received orders for the offshore export cable systems for Ørsted’s 2.9 GW Hornsea 3 offshore wind farm in the UK, ScottishPower Renewables’ 1.4 GW East Anglia Three, also in the UK, and the 1.2 GW Baltic Power offshore wind farm in Poland, developed by PKN Orlen and Northland Power.

The Danish company also saw a massive boost in its order book following a contract for five power cable projects signed with the German TSO 50Hertz, worth a total of EUR 3.5 billion.

In addition to the projects in the backlog, NKT also signed agreements for further projects in 2023, which are yet to be signed as firm contracts.

As reported last year, NKT inked a multi-year framework agreement with Tennet for further three offshore wind projects in the Netherlands with a total generation capacity of 6 GW: Nederwiek 3, Doordewind 1, and Doordewind 2.

“The contracts are expected to be called off in 2025 and will have a combined value of approx. EUR 1.5 bn, which covers the majority of the project scope. The framework agreement runs until 2028, with possible extension until 2031. Additional projects could be added under the framework agreement,” NKT states in its 2023 results.

In the interconnector market, NKT highlighted a contract the company signed in 2023 for the Biscay Gulf Interconnector that will connect France and Spain. The contract was awarded by INELFE, a joint venture between the Spanish TSO Red Eléctrica and its French counterpart RTE.

The company also signed capacity reservation agreements for two Scottish transmission link projects, Western Isles and Spittal-Peterhead, with SSEN Transmission. The combined value of these two projects is estimated to be above EUR 1 billion. NKT and SSEN also intend to enter into a framework agreement for future projects, according to the cable manufacturer.

“2023 was a successful year for NKT with organic revenue growth of 36% and the highest annual operational EBITDA in company history,” said NKT CEO Claes Westerlind.

“Demand for high-voltage power cable systems was unprecedented during the year. This led to a record order intake bringing our high-voltage order backlog to EUR 10.8bn and the launch of an approximately EUR 1bn investment program. We enter 2024 with a robust financial position that forms the foundation for further improvement of financial performance.”

In May 2023, NKT announced an approximately EUR 1 billion investment programme in its high-voltage business, which is supported by strong long-term visibility from the high-voltage order backlog, according to the company.

“The expansion is progressing according to plan and will add end-to-end production capacity next to our existing facility in Karlskrona, Sweden. Once completed, the full Karlskrona site will be the largest high-voltage offshore cable production site in the world. These investments will further improve NKT’s ability to meet growing demand for especially long-length HVDC power cable solutions, while also adding a market leading cable-laying vessel for offshore installation,” NKT states.