Sumitomo & Van Oord Secure Agreement for Shetland 2 HVDC Link
Sumitomo Electric Industries, Ltd., together with its consortium partner Van Oord and in collaboration with SSEN Transmission, has announced the signing of a Capacity Reservation Agreement (CRA) for the supply and installation of a second 525kV HVDC cable link between Shetland and the Scottish mainland. This agreement represents a landmark development for Scotland and the UK, ushering in a new era of advanced energy infrastructure.
The project’s HVDC cable will be manufactured at Sumitomo Electric’s state-of-the-art facility currently under construction in Nigg, northeast Scotland. This marks a significant milestone for the UK, as it will be the first time cables of this type and technology are manufactured domestically. The initiative is poised to deliver substantial benefits to the HVDC local economy and the broader national infrastructure, solidifying Scotland’s position as a leader in renewable energy.
This announcement follows the May 2024 decision by SSEN Transmission to select Sumitomo Electric and Van Oord as preferred bidders for the Shetland 2 project. The CRA reinforces Sumitomo Electric’s commitment to its £350 million investment in the Nigg cable manufacturing facility, a flagship project for offshore cabling in the UK and Europe.
Construction Progress at the Nigg Facility
The construction of the approximately 150,000-square-meter manufacturing site is progressing on schedule. Groundbreaking took place on May 15, 2024, and significant milestones have already been achieved. Piling works are nearing completion, and the factory foundations are well underway. The next phases of construction, including steelworks and factory fit-out, are expected to be completed within 12 to 15 months.
Sumitomo Electric has prioritized engaging the local supply chain, with 55% of the construction spend allocated to Scotland and the remaining 45% distributed across the UK and Ireland. This investment will generate 150 full-time equivalent (FTE) jobs HVDC directly at the facility, with additional indirect employment opportunities expected to double this figure. The project’s impact on the local economy underscores its importance to the region.
Statements from Key Stakeholders
Yasuyuki Shibata, Chair of Sumitomo Electric UK and Europe
“We are delighted to have penned this Capacity Reservation Agreement with SSEN Transmission. This is a significant milestone for Sumitomo Electric’s subsea cable factory investment in Scotland. Sumitomo Electric UK & Europe and Van Oord are committed to the successful construction of the HVDC link in a safe and timely manner.”
Arnoud Kuis, Managing Director Offshore Energy at Van Oord
“We are pleased to announce the signing of the Capacity Reservation Agreement with SSEN, representing a significant milestone for the Shetland 2 project. At Van Oord, we take pride in contributing to this initiative with our extensive expertise in cable installation. This agreement underscores our shared commitment to delivering energy infrastructure and enhancing the energy transition.”
Rob McDonald, Managing Director of SSEN Transmission
“We are delighted to reach this major milestone with Sumitomo Electric and Van Oord for the Shetland 2 project. It’s great to see the HVDC progress being made at Sumitomo Electric’s new cable manufacturing facility, and we are extremely proud to support their investment and the major boost to the Highland economy this will unlock.”
Support from Government Leaders
The project has garnered strong support from government officials, highlighting its role in advancing the UK’s energy transition and economic growth.
Poppy Gustafsson OBE, Minister for Investment
“Economic growth is an integral part of our Plan for Change, and this fantastic investment will play a key role in supporting our transition to net-zero. With clean energy identified as a growth sector in our upcoming Industrial Strategy, we’re not only helping to attract and secure investment but also delivering long-term, stable growth that supports skilled jobs across Scotland and the UK.”
Michael Shanks MP, Energy Minister
“Our mission to make Britain a clean energy superpower brings with it vast opportunities to invest in our highly skilled British supply chains, creating thousands of jobs in Scotland and across the UK. Sumitomo HVDC Electric’s manufacturing facility is a fantastic example of the world-leading offshore expertise here in Scotland – which will play a huge part in the expansion of the UK’s homegrown clean energy sector.”
Gillian Martin MSP, Acting Energy Secretary
“Scotland is fast becoming a renewable energy powerhouse, providing opportunities to grow our economy and create jobs while protecting the environment. The Scottish Government is allocating up to £500 million over five years to anchor the offshore wind supply chain in Scotland, ensuring our workforce, businesses, and communities all benefit from the offshore renewables evolution. This announcement builds on crucial support provided by the Scottish Government to Sumitomo Electric, which will locate its cable factory at Nigg, creating hundreds of jobs in the Highlands.”
Significance of the Shetland 2 HVDC Link
The Shetland 2 HVDC project is critical to supporting the UK’s transition to renewable energy and meeting its net-zero targets. High Voltage Direct Current (HVDC) technology is essential for efficiently transmitting large amounts of renewable energy over long distances with minimal losses. This technology is particularly crucial for connecting remote areas, like Shetland, to the national grid.
The planned Shetland 2 link will enhance the reliability and capacity of the energy network, enabling the integration of more renewable energy into the grid. The project will also play a key role in supporting the growing offshore wind sector, which is vital for reducing carbon emissions and ensuring a sustainable energy future.
Economic and Environmental Impact
The establishment of Sumitomo Electric’s manufacturing facility in Nigg is a transformative development for the Highland economy. By creating hundreds of direct and indirect jobs, the project will stimulate economic growth and provide new opportunities for local businesses. The facility’s advanced manufacturing capabilities will also position Scotland as a hub for offshore wind and renewable energy technologies.
In addition to its economic benefits, the Shetland 2 project aligns with Scotland’s commitment to environmental sustainability. By facilitating the transition to renewable energy, the project will contribute to reducing greenhouse gas emissions and combatting climate change.
The signing of the Capacity Reservation Agreement for the Shetland 2 HVDC link marks a significant milestone in the UK’s journey toward a sustainable energy future. With the construction of Sumitomo Electric’s state-of-the-art manufacturing facility in Nigg, Scotland is poised to become a leader in renewable energy technology and infrastructure.
This ambitious project reflects the combined efforts of industry leaders, government officials, and local communities to drive economic growth, create jobs, and advance the energy transition. As the Shetland 2 project progresses, it will undoubtedly serve as a model for future renewable energy initiatives in the UK and beyond.
