A fire at National Grid’s IFA1 interconnector site in Sellindge is to see power prices once again spike in the UK as 1GW of capacity drops off the system.
A spokesperson for National Grid confirmed the incident, stating: “The site has been evacuated and the safety of our staff, emergency teams and local residents is our highest priority.”
The event comes during a difficult time for the UK power market, which is already experiencing intense price pressures. Phil Hewitt, director of power market analyst firm EnAppSys, said: “Today the tight market will be affected. Tomorrow a forecast tight market will become really tight; expect even higher prices in the spot markets going forward.”
This was echoed by Adam Lewis, partner at Hartree Parnters, who said the timing of the outage "couldn't have been worse for the UK" with continued low nuclear availability, plant maintenance, low wind and higher than seasonal demand.
"UK’s energy bills are already at record levels but this outage is likely to push bills even higher if it’s duration is significant," Lewis said.
According to Kent Fire and Rescue, the fire started not too long after midnight, with 12 fire engines plus other specialist vehicles fighting the fire using compressed air foam at the height of incident. In an update released at 9:15am, the Kent Fire and Rescue Service said it remains at the scene with ten fire engines, a height vehicle and a bulk water carrier in attendance.
It said that while progress was being made, firefighters are expected to be on site for some hours to come.
The incident comes during a period of exceptionally high power prices as a combination of limited supplies and low margins have driven prices to record-breaking levels.
While National Grid ESO confirmed to Current± that it currently has a sufficient buffer of spare capacity to operate the electricity system securely over this evening’s peak demand period, EnAppSys warned that the loss of the 2GW IFA1 interconnector – which links the UK with France – will see the market become even tighter.
While IFA1 was only at half capacity, it was due to return to full import at the weekend, and could see an extended outage as a result of the fire, according to EnAppSys.
Hartree's Lewis said that the market will need to monitor the length of the outage "carefully" as it will impact the UK’s security of supply not only this week as margins are very thin, "but also potentially into winter".
Concern over the winter period has been growing over the period of high power prices, while National Grid ESO itself warned of tight margins in the winter period due to supply uncertainty in an early view of its winter outlook, released in July.
Hewitt said that with these tight winter margins, the fire at IFA1 “puts the GB market in a risky position for the winter and especially if we suffer from periods of low wind and cold temperatures”.
EnAppSys’ data shows that in the year to date overall average power prices have been over double the average price in 2019-2020, and in the last two weeks daily average prices have been eight times the average in 2019.
Yesterday’s (14 September) auction for today cleared at a record high peak price of £2,500/MWh or the peak demand period at 7pm.
Prices today in the auction for tomorrow (16 September) cleared lower, however they were still significantly higher than usual at £1,860/MWh for the evening peak. Prices on the remaining interconnectors were also high, with the Britned cable clearing at €2,131/MW/h (£1,823.70/MW/h).
It follows day-ahead prices for 14 September hitting a peak of £1,675.30/MWh for EPEX and £1,750/MWh for Nordpool. Both beat the previous records of £1,500/MWh and £1,499.62/MWh set on 14 January 2021 and 13 January 2021 for EPEX and Nordpool respectively.
However, the fire does mean that France now has a net extra 2GW of available supply, potentially helping prices on the continent.