UK power prices soar after key cable hit by blaze

A key electricity cable between Britain and France has been shut down, sending wholesale energy prices soaring. National Grid said a fire and planned maintenance at a site near Ashford in Kent means the cable will be totally offline until 25 September.

Half of its capacity, or one gigawatt (GW) of power, is expected to remain unavailable until late March 2022. On Wednesday, British electricity prices for the following day jumped by 19% to £475 per megawatt hour (MWh).

The fire at the Interconnexion France-Angleterre (IFA) site broke out in the early hours of Wednesday. The site was evacuated and there were no reports of casualties.

After the fire an electricity interconnector running under the English Channel was “not operating”, the National Grid said in a statement.

A spokesperson for National Grid’s electricity system operator, which balances power supplies in the UK, said it expects to “continue supplying electricity safely and securely” despite the incident.

The jump in prices has been fuelling concerns about inflation and the potential impact on businesses just as the country’s economy starts to recover from the worst effects of the coronavirus pandemic.

Analysts are now closely watching National Grid’s efforts to get the facility fully back online as winter approaches and with it higher energy demand.

Glenn Rickson, head of European power analysis at S&P Global Platts Analytics, told Reuters: “The outage is going to lift the potential for price volatility as long as it’s offline… and of course demand will get higher as we move further into winter.”

In addition to higher electricity prices, gas prices have also been soaring. On Wednesday, a major fertiliser manufacturer, CF Industries, said it was halting operations at its UK plants at Billingham and Ince “due to high natural gas prices”.

It added it did not have an estimate for when production would resume.

National Grid said its investigation into the fire at the IFA site was continuing and it would “update the market with any changes as necessary”.

Britain is a net importer of electricity and near neighbour France is its biggest supplier of power through the interconnectors that run under the English Channel.

The IFA2 interconnector, a second link between Britain and France, is currently operating at its full capacity and not affected by the problem.

The 1GW connection is a £700m shared investment with French power firm RTE and the UK’s fourth power exchange with continental Europe.