The funding consists of an initial £20m from the UKIB with an option to invest a further £67m upon XLCC achieving specific development and funding milestones.
This investment demonstrates the Bank’s commitment to working with private investors to support the Government’s Clean Energy Mission to make the UK a clean energy superpower and accelerate to net zero. Strengthening homegrown supplies of components and parts, that are essential for net zero such as HVDC cable, is fundamental to achieving this mission.
The Bank’s financing will help XLCC develop its factory in Hunterston, Scotland, which once completed will have capacity to produce thousands of km each year of leading edge HVDC cable. The UKIB commitment is complemented by additional investment from existing and new investors. This is incremental to the funding of over £40m raised by the company to date, to design the product, complete detailed design activities for the factory and to achieve full planning permission at the site.
The project is firmly in line with the Bank’s twin missions to help tackle climate change and support regional and local economic growth. Once complete the Hunterston factory will create around 900 permanent jobs including over 200 apprenticeships, meaning the factory is also helping to create the manufacturing skills the country needs to support the growth of the UK as a global hub for offshore wind.
Subsea HVDC cables built at Hunterston will be capable of transporting energy over long distances with significantly increased efficiency. As such, they will play a fundamental role in the upgrade of the grid required for the energy transition. This will enable the connection of renewables at scale and allow the clean energy produced by wind farms in the North Sea to be transported to homes and businesses around the country – strengthening our energy security as well as supporting decarbonisation.
Industry regulator Ofgem has welcomed the Bank’s focus on capacity additions, and the acceleration of the domestic supply chain for the critical infrastructure required to deliver these vital grid projects.
John Flint, UK Infrastructure Bank’s CEO, said:
Industry projections indicate that demand for subsea cables will soon exceed existing supply chain capacity. Our support for XLCC is intended to provide confidence to the market, crowding private investment into this sector to boost production capacity in an industry set to have a significant impact on the UK‘s transition to net zero.
Ian Douglas, XLCC’s CEO, said:
XLCC's mission is to provide critical elements of the infrastructure that is essential to the energy transition and will reduce project costs to the benefit of the UK consumer. The creation of the Hunterston facility in Scotland brings significant investment to the UK, creating highly skilled jobs in advanced manufacturing and project management for decades to come. We welcome the foresight of UKIB and our other investors in recognising the opportunity to create a new force in HVDC cables to address both domestic and global requirements.
Jonathan Brearley, Ofgem CEO, said:
Britain is seeing the biggest transformation of the energy grid for decades. It will have long-term benefits for us all – true energy security, cutting emissions and protecting consumers. It demands unprecedented levels of public-private investment in clean power, so we welcome the UKIB’s commitment today to green industry, jobs and growth.
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