Sumitomo Electric Industries : Midium-term strategy for electric power cable (November 13, 2023)

Medium-Term Strategy for Electric Power Cable

Sumitomo Electric Industries, Ltd.

November 13, 2023

1. Electric Power Cable Business Unit - Overview and Medium-Term Targets 2/10

(1) Overview

(2) Medium-Term Targets

• Electric Power Cable Unit Results for FY 2022

Sales ¥200 billion

• Major Products

Electric Power		Engineering		Distribution		Overhead
Cable				Accessories		Conductors

FY2030

Aim for sales of 150% or more and operating

profit of 200% or more compared to FY2022

• Sites

Foreign

Domestic

Ibaraki Works

SEUK-CL (UK)

Submarine Cable	Itami
(Established May,2023)	SEI-Futong

(Hangzhou)

Accessories

JPSS (Saudi

Arabia)

Submarine

Cable

Osaka Works

F-JPS (India)

High-Voltage Cable	SIK (Indonesia)

Electric Power Cable

Business Unit

Sales / Operating Profit

Land

Sub-

marine

150% or more

Sales

200% or more

Operating

Profit

Low and Middle Voltage Cable

FY2020

FY2022

FY2025

FY2030

2. Market Environment and Priority Initiatives

3/10

Increase in renewable energy investment has expanded the demand for DC interconnectors and offshore wind power. Demand for domestic equipment renewal has been steady.

Strengthening manufacturing and installation capacity, mainly in Europe and Japan, to capture growing demand.

Market Environment	Priority Initiatives

DC Interconnectors		Europe: Increase manufacturing and
Compared		Europe: Rapid growth and
About 400％	installation capacity
to 2022	Other	reinforcement of DC	Cooperation with Siemens
	interconnectors
	Japan	Japan: DC interconnection line project

100％

Japan: As renewable energy expands,

Development: High-performance insulation

Europe

materials

future demand for

Protection Engineering method

interconnectors will gain speed

2022

2030

Offshore Wind

Compared to 2022

Renewable energy is expanding to

About 600％

achieve decarbonization

Europe: Augment production capacity

United

States

Japan: Transmission package with

Europe

Installation of offshore wind is

Nissin/Densetsu

100％

accelerating mainly in Europe and

Development:Larger scale / Floating type

China

Japan

China

2022

2030

Domestic Market

Compared to 2022

100％ About 110

％

Demand is at a high level due to the

Long-term partner contracts

updating of aging equipment

Augment construction capabilities

Many long-term contracts with

partners

Continue to introduce distinct products

2022

2030

3. DC interconnectors

4/10

Acceleration of interconnection line reinforcement. There is a move toward preferential local content in response to increased demand for DC cables and from the perspective of energy security. We will also establish a base in Europe.

(1) Market Trends

■Europe

･Accelerated construction of national and interregional interconnection lines.

･Plans are being developed to reinforce European power grids

(～FY2040, 70,000 km cable length)

(2)Our Projects * indicates collaboration with Siemens (Germany)

Country	Project Name	Underground/	Voltage / Cable Length	Launch/
Submarine	Completion

England -	NEMO Link
Belgium	Highest submarine	Submarine	400 kV / 283 km	May 2019
	voltage in the world
India	PK2000 *	Underground	320 kV / 128 km	March 2021
England -	Greenlink *	Submarine	320 kV / 380 km	Planned for
Ireland	2024
UAE	Lightning	Submarine	400 kV / 420 km	Planned for
Highest submarine
2024
	voltage in the world
Germany	Corridor-A (CAN)		525 kV / 640 km	Planned for
Highest voltage in	Underground
2029
	the world

Plans of major operators to augment

power grids

■Japan	Source: ENTSO-E (2023), Figure 1.4

・Plans to expand the interconnected power grid, mainly

along the Hokkaido → Honshu route.

・OCCTO formulated a master plan in March 2023. Basic requirements will be formulated in FY2023, and public solicitation for operators and selection of suppliers are expected in FY2024 or later. (～FY2050, 8,000 km cable length)

In addition to the track record with NEMO etc., build relationships with European customers.

We've seized the Corridor-A in Germany, and we are currently looking toward future projects.

1. Our Initiatives

• Develop insulating material

• Manufacturing a highly insulating compact cable with reversible polarity and heat resistance up to 90 °C is possible.

■Installation method development (cable laying vessel, deep-sea cable laying, protection technique)

■Collaboration with Siemens (cable + transducer)

3-2. DC interconnectors - UK/Germany Market

5/10

We are currently handling DC cable projects in the UK and Germany, where demand is particularly strong.

(1)UK market

■Greenlink overview

･International interconnection line between UK and Ireland. The project is being promoted in a consortium with Siemens of Germany.

Voltage	DC±320kV
Cable length	Submarine 160 km x 2, Underground 29 km x 2
Process	Dec 2021: Order received, 2024: Construction complete

■UK-Scotland DC interconnection line project

For the purpose of regional power interchange, the construction of a DC transmission network is progressing. (～FY2040, cable length 20,000 km)

(2)German market

■Corridor-A overview

• Project to transmit electricity generated from renewable energy sources in northern Germany to electricity demand areas in the south

			DC±525kV
		Voltage	World's highest
Our order route
		voltage
Corridor-A

Cable	320 km Underground x
3 strips (including
length
neutral lines)
	Jun 2020: Order
Process	received
	2029: Scheduled
	completion

■Germany DC interconnection line project

Plans for the development of a large- scale DC power grid for the purpose of transmitting onshore and offshore wind power are progressing.

(～FY2040, 23,000 km cable length)

Source：Amprion -Grid expansion

4. Offshore Wind Power

6/10

The installation of offshore wind power is accelerating. Progress is being made on scaling up the size of wind turbines and power farms.

Capture demand by responding to higher voltage and larger size of cables.

(1) Market Trends

(2)Domestic Major Projects* projects already accepted at our company

■ Forecast for Offshore Wind Power Installation (Units: GW)

Project Name	Amount (MW)	Period

*Japan: Offshore General Sea Area

1R+2R: Less than 3 GW

2030 goal: 10 GW

Total

Americas

Akita Port, Noshiro Port *	140	Jan 2023 operation start
Ishikari Port *	100	2023 scheduled to be
completed
Goto Sakiyama *	16	2023 scheduled to be
completed

Asia

China

Europe

UK

UK

• Increasing Turbine Size

10 MW or larger becomes mainstream

Eiffel Tower

	North Akita	480	2026-2027
	Yurihonjo	820	2027-2029
	Choshi	390	2026-2027
(3) Our Initiatives
■ Technological development
-Insulating materials
･water tree retardant
･Non-cross-linked (environmental
performance)
- Dynamic cables (for floating turbines)
･Twisting/bending/abrasion resistance
･High voltage (154kV)
	Dynamic
･Advanced operation system
	Cable
(Diagnosis of movement and degradation due

to twisting and flexing)

• Transmission package with Nissin/Densetsu

	Source： IEA Offshore Wind Outlook 2019, All rights Reserved.	･Cable, power receiving, substation and engineering, grid issue
⇒ Increased	cable size and voltage	resolution

5. Overview of New Plant in Scotland	7/10

We will build a new plant for submarine cables in Scotland, UK, where demand is expected to increase dramatically. This will allow us to capture demand for DC interconnectors and offshore wind power around Scotland and the rest of the UK.

• Company Overview

Ross-shire

Scotland

■ Manufactured Products

Name of New	Sumitomo Electric U.K. Power Cables Ltd.
Company
Location	Ross-shire, Scotland, UK
Business Details	Manufacture and sale of electric power cable
Capital	£127 million
Shareholder Ratio	100% owned subsidiary
Establishment/	Established	May 2023; Operation begins September 2026
Operation	(planned)

Array cables for offshore wind power

Cables for DC interconnectors

Cables that connect wind turbines to each other and turbines to offshore transformer substations

The grid connections between nations and regions are quickly becoming longer and higher voltage.

The use of DC cables, which have low transmission loss compared to AC cables, is increasing.

turbine offshore land substation

Land Segment
Land Segment
	Cable>
	Submarine

Segment	Demand
Area

DC Interconnector Cable		Transformer
		Substation

(AC)		(DC)		(AC)

Array Cables

(Export Cable)

6. Domestic Power Cable Market

7. Strengthening manufacturing

8/10

Steady demand for updating aging equipment Aim to ensure demand through long-term partner agreements

Continue to build global manufacturing systems (including in Europe) and expand the production capabilities of the mother factories in Japan throughout the world

1. Market: Introduction of revenue cap system to
   promote equipment renewal

(1) Our initiatives

■Safety and environment

1,500 km of OF cable is over 30 years old

Aluminum

Coated

Lead Coated

Subject to renewal

（km)

-Train safe people and build a culture of safety -Reduce CO2 emissions, expand GX products

■Quality

-Own process quality assurance

-Quality assurance function enhancing

(2) Our initiatives

• Enhance workability and long-term agreements with partners
  -Promotinglong-term contracts to secure manufacturing and construction capabilities

-Plan to increase the number of

2022 2025 2030

construction teams to meet increased demand

• Continue introducing distinct products

• Low-losselectric cable; maintenance and monitoring systems
• DLR sensors

■Cost reduction

-Develop new insulating materials

-Improve of overall efficiency of facilities (Reduce outage loss, performance loss, and defective loss)

-Reduce labor (utilize DX)

■Asset efficiency improvement

• Shorten lead times, reduce inventory, and improve CF

8. Conclusion

9/10

Contribute to achieving a carbon-neutral society via the top

technology and manufacturing in the world

DC interconnectors and Offshore Wind Markets: Rapid expansion of installation due to decarbonization

Domestic Power Cable Market: Steady demand for updating aging equipment

・Expanding manufacturing and installation capacity mainly in Europe and Japan (Submarine cable business + Land cable business)

・Development of GX-related products, methods, and systems (DC and offshore) ・Strengthening manufacturing capabilities (quality improvement, cost reduction) ・Strengthening project management

We will advance the above points in efforts to achieve our medium-term targets.

10/10

https://sumitomoelectric.com/