Bonds Created by Overcoming A Number of Challenges

“Without Sumitomo Electric Group’s insulation technology, we would not have won the order,” says Takuya Miyazaki in charge of installation for the project. The project selected the world’s first HVDC XLPE insulated cable operating at a maximum of 400 kV commercialized by the Sumitomo Electric Group.

Shinya Asai, General Manager, Nemo Link Project Office comments on the XLPE insulated cable. The Sumitomo Electric Group has worked on the development of proprietary polymer-based insulation technology since the 1980s. In the area of XLPE insulation materials for use in DC transmission cables, the Group was conducting research a step ahead of its competitors. Nemo Link indicated a voltage requirement of 400 kV for the current project. Sumitomo Electric was the only company that had developed a DC XLPE cable system rated for such a high voltage, completed a long-term (one year) operation test in accordance with the applicable international standards, and made it available as a commercialized product. Moreover, XLPE was a major contributing factor to winning the contract for the project due to its cost competitiveness as exemplified by its higher allowable operating temperature than conventional cables, permitting higher transmission capacity for a given conductor size. In addition, the client highly valued the eco-friendliness of the polymer-insulated XLPE cable in comparison with conventional oil-insulated cables.

The world’s first use of the 400 kV DC class XLPE insulated cable certainly meant that the project would be epoch-making for the electricity industry.

The opportunity had come for Sumitomo Electric to participate in the bidding. We were confident about our cable technology and process management from manufacture to shipping. However, there was a huge difference in the standard business practices between Europe and Japan. In Europe, it was standard to sign a package contract known as “engineering, procurement and construction (EPC)” covering system design and installation, with it being rare to simply provide cable manufacturing and supply. Consequently, it was necessary for us to build the framework and expertise required for completing cable installation.

Furuhashi and Sumitomo Electric team members made every effort to find construction companies that had the required experience and knowledge of projects in Europe. Since the Sumitomo Electric Group had no track record in the region, it was extremely difficult to find a construction company that would collaborate with the Group. There were times when even our request for a quotation was declined. Several months had passed since we began the search for construction companies everywhere in Europe. Then finally, we encountered Balfour Beatty plc capable of undertaking installation on land and DeepOcean specializing in subsea installation. Danny Kelker of DeepOcean explains why they accepted our request: “DeepOcean has installed cables manufactured by Sumitomo Electric on previous projects. We were impressed by the quality of the technology, so are pleased to be working again with Sumitomo Electric to deliver this contract with them.” It was their trust in the Sumitomo Electric Group that convinced them to be our partner. The construction companies provided us with their views and support, which were indispensable for preparing the bid documents. It took one year for us to complete the bid documents, which amounted to a stack of files 10 cm thick, containing 20 volumes, a very substantial package.

This was only the beginning of the real challenge. The bid documents were regarded as a proposal. After bidding, negotiations took place between the client and bidders, through which the client determined the winning company.

Business customs were completely different from those in Japan. One day, Furuhashi arrived at the negotiating table by himself. The client was accompanied by a team of attorneys at the table. “They looked at me probably wondering why I had showed up without legal experts. I was completely ignorant about the proper form of negotiation in Europe,” he recollects. He immediately hired attorneys and consultants well-versed in contracting in Europe to prepare for a full negotiation process.

The post-bidding negotiation continued for two years. In Europe, contract conditions are far more detailed than in Japan due in part to differences in historical and cultural backgrounds. In the course of the negotiations, Furuhashi nearly gave up a number of times. Nonetheless, he persevered because he had confidence in the technical prowess of his company. “Once the contract is concluded, our project team will overcome any challenges and complete the assigned tasks. I had no doubt about this.”

Negotiations were protracted. Furuhashi responded to the client’s concerns by suggesting solutions repeatedly in collaboration with the executives and many relevant staff in the company and clarified each condition. The 1,000-page contract was finally completed in 2015 although there had been many twists and turns. A big signing ceremony was held in London with the attendance of officials from both the British and Belgian governments, executives of Nemo Link, its stakeholders National Grid and Elia, and of the Sumitomo Electric Group. The Nemo Link and Sumitomo Electric Group staff looked back with deep emotion on the long course of the contract negotiations. It was the moment when the Sumitomo Electric Group became the first Japanese firm to enter the European interconnector cable market.