UK energy updates
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A large fire at Britain’s main electricity subsea cable with France has reduced imports to the UK, pushing up prices at a time when tight supplies have driven them to record highs.
National Grid said the fire had broken out at the IFA1 interconnector site in Sellindge near Ashford in Kent, with emergency services in attendance.
Natural gas prices in the UK, which had hit a series of record highs in recent weeks, soared by more than 18 per cent on the news with traders calculating that gas-fired power generators will need to run harder in the coming days to compensate for the loss of imports.
Day ahead prices at the National Balancing Point reached £1.89 a therm, more than double the level they traded at just two months ago and more than five times the level of September last year.
National Grid ESO, the part of the FTSE 100 company that is in charge of balancing Britain’s electricity system, insisted it was still anticipating “sufficient” margins between supply and demand during peak hours on Wednesday evening despite the fire.
The interconnector, which has been operating since 1986 and imports largely nuclear-generated power from France when required, had only been operating at half capacity due to maintenance. A second 1GW interconnector between Britain and France known as IFA2 is unaffected.
Kent Fire and Rescue Service said on its website that more than 10 fire engines had attended the scene after the fire broke out overnight.
“Progress is being made, however firefighters are expected to be on site for some hours to come,” the fire service said on its website at 9.15am.
RTE, France’s transmission operator, said the interconnector would be out until “at least” October 13.
Interconnectors, subsea cables through which Britain imports and exports electricity with countries including Belgium, France, Denmark, Ireland and the Netherlands, have played an increasing role in helping to balance the electricity system in recent years as the country has moved away from fossil fuel generation to more weather dependent sources such as offshore wind.
Britain currently has six operational interconnectors with a capacity of 6GW. A seventh, which connects Britain to Norway, was switched on for testing in June.
The UK government said in a white paper in December that Britain would need at least 18GW of interconnector capacity by 2030.
Glenn Rickson, head of European power analysis at S&P Global Platts Analytics, said the disruption due to the fire was likely to be an issue “for weeks, maybe months”.
“It couldn’t come at a worse time for the UK and I would expect [electricity prices] to spike strongly, even relative to the new records seen this week,” he added, saying that auction prices for peak power demand later on Wednesday were likely to soar.
The UK has experienced record electricity prices in recent weeks as strong gas prices have fed through to the power market, while inclement weather has cut wind power generation and also led to some coal-burning plants to switch on ahead of peak demand hours.