Scotland's hopes of building a renewable industry supply chain have been handed a major boost after work began on a subsea cable manufacturing plant on the Cromarty Firth.

Sumitomo Electric has broken ground on the £350 million facility at the Port of Nigg, which the Japanese company said will supply critical elements for reinforcing the UK electricity transmission grid and connecting renewable energy production facilities to the electricity network.

The project has been hailed as one of the biggest ever inward investments to the Highlands and Islands.

At a ground-breaking ceremony yesterday, it was announced that Sumitomo and Van Oord had been selected by SSEN Transmission as the preferred bidders for the Shetland 2 525kv (kilovolt) high voltage direct current subsea power cable project.

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Shetland 2 is described as an anchor project for the new manufacturing facility, enabling the transfer of wind energy generated in the North Sea to consumers. It will be able transfer two gigawatts of renewable electricity over a distance of 330km from Shetland to the Scottish mainland.

Van Oord is SSEN’s cable installation partner.

Highlands and Islands Enterprise and sister economic development group Scottish Enterprise hailed the start of work at Nigg as a “significant milestone” for the country’s offshore supply chain.

Stuart Black, chief executive of HIE, said: “Today’s [Tuesday’s] ground-breaking event by Sumitomo Electric Industries Ltd is a great boost for the Highlands and Islands economy and demonstrates strong investor confidence in Scotland.

“With the company also named as preferred bidder for SSEN’s Shetland 2 link, we now see the exciting prospect of high voltage subsea cables manufactured here in the Highlands being deployed in our own coastal waters and helping to strengthen the UK electricity grid.

“At £350m, the Sumitomo project is one of the biggest inward investments we’ve ever attracted to the Highlands and Islands, working in partnership with our colleagues in Scottish Development International and Scottish Enterprise.

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“The new Inverness and Cromarty Firth Green Freeport played an important role in the company’s decision which we expect will lead to around 300 Scottish jobs created on site and in the supply chain.”

Osamu Inoue, president of Sumitomo Electric Group, said: “I am pleased to announce commencement of this innovative high-voltage cable factory in Scotland, and sincerely appreciate SSEN Transmission’s decision to select us as the preferred bidder of Shetland 2 project to enable our significant investment here in the UK.

“Transmission cables are key essential infrastructures to make so called energy transition to renewables into reality. I believe, this factory will make good contributions towards establishment of local supply chains and to realise UK and Scottish Governments’ net zero initiatives.”

Rob McDonald, managing director of SSEN Transmission, said: “We are delighted to reach preferred bidder status with Sumitomo Electric Industries and its subsea cable delivery partner, Van Oord Offshore Wind UK, for the manufacture and installation of the Shetland 2 HVDC subsea link.

“Sumitomo’s investment in a new cable manufacturing facility in Nigg will help deliver a homegrown supply chain to help support our energy security and net-zero infrastructure requirements. This is great news for the Highland economy and will support hundreds of skilled jobs in the region, helping unleash the economic potential the clean energy transition presents for the north of Scotland.”

Adrian Gillespie, chief executive of Scottish Enterprise, said: “Today marks an important milestone for Sumitomo Electric Ltd’s planned £350m investment in the Scottish renewable energy supply chain.

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“The company’s high voltage subsea cable manufacturing site at Port of Nigg is a critical addition to Scotland’s growing offshore wind supply chain, better enabling us to seize the economic opportunities presented by the global energy transition.

“Scottish Enterprise’s energy transition mission aims to accelerate technology innovation, supply chain capability and investment in manufacturing and key infrastructure. Sumitomo is a great example of this mission in action, and we’ll continue to work closely with them, both domestically and through our international arm Scottish Development International, as their plans for Scotland develop.”

The development at Nigg came after Haventus, the energy transition facilities provider and owner of Ardersier Port, east of Inverness, secured a £100m joint credit facility from the Scottish National Investment Bank and UK Infrastructure Bank. The funding will underpin the development of an infrastructure facility to support the industrial-scale deployment of fixed and floating offshore wind at the port.