Rabu, 15 September 2021

Fire at UK-France electricity subsea cable triggers new price surge - Financial Times

A large fire at Britain’s main electricity subsea cable will reduce imports from France until the end of March next year, National Grid has warned, triggering fears over tight supplies at a time when power prices have already surged to record highs.

The FTSE 100 energy company said on Wednesday morning that a blaze had broken out at Sellindge near Ashford in Kent, where underground cables that are part of the IFA1 interconnector link up to a converter station. Emergency services have been in attendance most of the day.

Natural gas prices in the UK, which had hit a series of record highs in recent weeks, soared more than 18 per cent on the news, with traders calculating that gas-fired power stations would need to run harder in coming weeks — and potentially months — to compensate for the loss of imports.

At £1.89 a therm, gas prices are more than double the level they traded at just two months ago and more than five times last September’s level.

The IFA1 interconnector has been used to import electricity from France, generated largely by nuclear power, to balance the UK grid, since it opened in 1986. It was only operating at half capacity at the time of the fire due to planned maintenance work.

That work will finish on September 25 but National Grid warned that only 1GW of capacity would be available until March 27 next year due to fire damage.

“Our investigation is ongoing and we will update the market with any changes as necessary,” National Grid said. No cause for the fire had yet been determined, a spokeswoman for the company said.

A second 1GW interconnector between Britain and France known as IFA2 is unaffected. 

National Grid ESO, the part of the utility that is in charge of balancing Britain’s electricity system, said that despite the fire it was anticipating “sufficient” margins between supply and demand during peak hours on Wednesday evening.

But analysts raised concerns about the impact on supplies in the coming months. Even before the fire, National Grid ESO had warned there would be some “tight periods during the winter” particularly in the “shoulder months” such as September, when many power stations are carrying out maintenance.

Glenn Rickson, head of European power analysis at S&P Global Platts Analytics, said the disruption “couldn’t come at a worse time for the UK”.

The UK has experienced record electricity prices in recent weeks as strong gas prices have fed through to the power market, while unsuitable weather has cut windpower generation. This led to some coal-burning plants being fired up ahead of peak demand hours.

Rajiv Gogna, a partner at LCP Energy Analytics, said “unfortunately we are going to see more high and volatile prices which is going to feed through to consumers”.

Phil Hewitt, director of the consultancy EnAppSys, said with tight margins already forecast for the winter, the reduced capacity on IFA1 put the UK “market in a risky position”.

Kent Fire and Rescue Service said on Wednesday morning that more than 10 fire engines had initially been called in after the fire broke out overnight. By mid-afternoon, four fire engines, two height vehicles and the technical rescue unit remained in attendance, it said.

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.

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2021-09-15 18:21:53Z
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