Future HVDC Cable Supply and Demand as a Potential Threat to the EU Energy Transition

This paper analyzes the factors that influence the manufacturing costs of high-voltage-direct- current (HVDC) cables in the EU, projects price developments through the year 2050, and provides potential measures to stabilize cable production costs. HVDC cables play an important role in the energy transition, because the economic operation of an increasingly decentralized power grid due to renewable energies requires technology with low transmission losses. The paper further identifies the contribution of each cost component and forecasts future values under various scenarios. Since the EU lists copper as a strategic raw material, a partial equilibrium model is employed to reduce uncertainty in price estimates for this commodity, the availability of which is critical for the manufacturing of HVDC cables. In a sensitivity analysis, the contribution of each input variable to our cable cost model is assessed. The results suggest that copper demand due to HVDC cable manufacturing exerts a negligible effect on EU copper prices, although cost trends diverge significantly across relevant Shared Socioeconomic Pathway scenarios. The paper concludes that cable costs are tied to the affordability of copper. Metal availability and regulatory framework impact the timely development of the HVDC connections that will be necessary for the energy transition in Europe.