In the shadow of a decommissioned nuclear power plant, a former coal-handling port in North Ayrshire is set to become the site for a £2bn factory that will produce thousands of kilometres of subsea cable used for transmitting renewable energy.
The regeneration project in one of Scotland’s most deprived areas is a test case for the nation’s ability to foster supply chain manufacturing capacity in a sector that has lured interest from overseas investors and is crucial to the UK’s ambitions to decarbonise power by 2030.
The UK and Scottish governments are seeking to harness the economic benefits of the transition to net zero to replace the well-paid jobs being lost in oil and gas, decades on from the pit closures.
“It’s widely felt that Scotland and the UK failed to build out local supply chain for fixed-bottom wind, instead relying on imports of equipment used in the sector,” said Laura Fidao, investment director at the Scottish National Investment Bank, which is part-funding the factory.
“We have a mandate to help build out the domestic supply chain to turn that around for floating offshore wind projects,” she added.
However, some industry executives have raised concerns over investing in untested technology.
The cables play a vital role in decarbonisation, as they are used to transmit power from offshore wind farms, reinforce grid infrastructure and build interconnectors to transfer electricity between different countries.
Manufacturing start-up XLCC plans to start commercial-scale production from 2030 of high-voltage direct current cables — for which demand outstrips supply by two and a half times — removing one of the biggest bottlenecks in the way of the transition to net zero.
Japan’s Sumitomo last year started construction on the UK’s first high-voltage direct current factory in the Highland port of Nigg that is aiming for production by the second half of 2026, with an estimated £350mn of inward investment backed by £24.5mn of public money.
XLCC’s UK ownership made it stand out, said Fidao at the Scottish National Investment Bank. However, some industry executives have raised questions over the start-up nature of XLCC, which has never built HVDC cable before.
One developer also said a key risk would be a slower-than-expected rollout of offshore wind farms in the UK, reducing potential orders.
Craig Stevens, investment director at SNIB, said the bank had taken comfort from XLCC working with strategic technical partners such as China’s Orient Cable to produce and test the cable. XLCC said it had hired experts in HVDC manufacturing and was using tried-and-tested technology.
One potential XLCC customer is a subsea electricity interconnector from Morocco to the UK envisioned by Xlinks, a company founded by Simon Morrish, who is also behind XLCC. But the project is awaiting UK government approval.
XLCC this month received a £20mn investment from SNIB, building on the UK’s National Wealth Fund earlier initial investment of £20mn, with the option for an extra £67mn as development progresses.
SNIB, which was founded in 2020 as a development bank, had been established to take on more risk and fund start-ups and growth companies in sectors needed to revitalise the Scottish economy, Fidao said.
The XLCC facility would support about 900 long-term jobs, including more than 200 apprenticeships, with a further 300 project management roles expected to be based in Scotland.
Expanding Scottish ports, Fidao added, was a priority given the significant quaysides expansion needed to assemble the infrastructure for the rollout of more offshore wind farms.
One of SNIB’s largest investments to date is a co-investment with the UK into US-owned Ardersier port on the Moray Firth, an inlet of the North Sea.
Scotland has a pipeline of 40 gigawatts of offshore wind projects, all of which will require subsea cables to transfer the power ashore.
“Projects are getting delayed, prices are very high,” said Ian Douglas, XLCC’s chief executive. “Companies are fighting very hard to secure supply — you are typically seeing seven-year waits for HVDC cable.”
European cable manufacturers such as Milan-listed Prysmian, Paris-listed Nexans and Copenhagen-listed NKT already had full order books, he added.
The first phase of construction envisions 1,300km a year capacity with the potential to rise to 2,600km a year. Global demand in 2030 was forecast at 10,000km a year, the company said.
The Scottish National party government also hopes to incentivise uptake for supply-chain companies such as XLCC by encouraging renewables developers which source equipment from domestic sources.
Seabed lease agreements for projects from the late 2020s include requirements for local supply-chain involvement.
“That will propel manufacturing — it is going to be extremely important to demonstrate local supply chain,” said Gillian Martin, acting secretary for net zero and energy. “Companies will even now be looking at this place for their cables.”
