Fire at Key U.K. Power Unit Knocks Out France Link Until October

Fire at Key U.K. Power Unit Knocks Out France Link Until October
·2 min read

(Bloomberg) --

A large fire at a key electricity converter station in the U.K. has shut down a major cable that brings power from France, worsening Britain’s energy crunch. Gas and power prices jumped.

The outage, which the U.K.’s grid manager said will last until at least Oct. 13, couldn’t come at a worse time with supplies already short and prices at record highs. Britain is a net importer of power, with France its biggest supplier via two cables that run across the English Channel.

Firefighters have been battling the blaze since the middle of the night and smoke continues to billow from the site.

The fire will still take several hours to put out, according to Kent Fire and Rescue Service. Flows on the 2,000 megawatt IFA-1 cable halted just after midnight, according to National Grid Plc data. The second IFA-2 cable -- with capacity of 1,000 megawatts -- is currently unaffected, a spokesperson said.

“This is a major event,” said Phil Hewitt, executive director at Enappsys Ltd.

National Grid sounded an early warning in July that the buffer of power capacity would be smaller this year. In one scenario they modelled -- with one interconnector knocked out and high demand -- margins would be the tightest in years.

“With margins already tight for this winter,” the outage will “tighten those margins further, resulting in higher U.K. power prices,” said Adam Lewis, partner at Hartree Partners LP. “This is also likely to tighten the U.K. gas markets as the U.K. will need to substitute imports with its own generation.”

U.K. gas futures surged almost 12% on Wednesday to a record 184.60 pence a therm. A lack of wind in the U.K. is boosting demand for gas, and also pushing up power prices. Day-ahead power reached a record 422.46 pounds a megawatt-hour in an auction on Epex Spot SE.

At the height of the incident, 12 fire engines plus other specialist vehicles were fighting the fire using compressed air foam to prevent the fire from spreading to other nearby buildings.

The fire also shut down the Eurostar track temporarily early on Wednesday, causing delays to the service.

(Add length of outage in second par.)

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