(Bloomberg) -- The British startup XLCC Ltd. aims to raise over £1 billion ($1.3 billion) for a factory in Scotland manufacturing subsea high-voltage cables vital for Europe’s transition away from fossil fuels.
XLCC has hired Morgan Stanley to assist in the fund-raising process, which the company aims to launch in the middle of next year, according to Chief Executive Officer Ian Douglas. The project is a bet on the booming market for the crucial electricity equipment.
“The whole thing for us is about scale,” Douglas said in an interview. “We have a really big home market. Everyone’s short of HVDC.”
The company aims to build a factory in Hunterston, Scotland with a 180 meter-tall tower to produce the cables that are necessary to connect offshore wind farms as well as under-sea connections between countries’ power grids. Such cables are in short supply, with manufacturers like Nexans SA, Prysmian SpA and NKT A/S sold out for years to come.
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XLCC aims to use the funding to prepare the first phase of production, which would be capable of producing about 1,300 kilometers (808 miles) of cables per year. Douglas said he aims to deliver the first cable by 2030.
Such a factory would be a boon for the UK as it seeks to use the green transition to drive economic growth. While the country is Europe’s leading market for offshore wind farms, it hosts few factories to supply the industry. Most of the massive equipment is made in mainland Europe and then shipped to Britain.
Before it goes to the market for more funds, XLCC is working to finalize how much the project will cost and build up an order book of potential customers.
The company was an offshoot of renewable power company XLinks — that aims to build a massive renewable power plant in Morocco and connect it directly to the UK via a 3,800-kilometer cable — but has since become a separate entity. While the companies have shareholders in common, XLCC isn’t tied to the project and aims to sell to other customers, Douglas said.
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