Energy prices soar after fire shuts down key electricity cable in Kent

Energy prices soar after fire shuts down key electricity cable in Kent

September 16, 2021

UK energy bills could ‘soar more than £250 in a year’ after blaze at Kent power facility damaged a major electricity cable running under the Channel to France that could take until March to repair

  • National Grid says blaze damaged a major power cable which will remain totally offline until September 25
  • It’ll be partly offline until next March, raising fears over tight supplies in the coming months leading to winter 
  • Large fire broke out at interconnector known as the Interconnexion France-Angleterre (IFA) in Sellindge, Kent
  • Average UK energy bills will rise from £1,138/yr to £1,277 on October 1 – and could go up to £1,405 next April 

British households could see their energy bills rise by more than £250 over the next year, analysts have suggested as wholesale electricity prices continued to soar following a fire at a power facility in Kent.

National Grid has warned that the blaze damaged a major power cable which will remain totally offline until September 25 and partly offline until next March, raising fears over tight supplies in the coming months.

The price cap determined by regulator Ofgem is set to rise by 12 per cent on October 1, meaning someone on typical use on a standard variable tariff paying £1,138 a year at the moment will then be paying £1,277 – up £139.

But analysts are now speculating that the level of the price cap could rise by 10 per cent when it is next updated in April 2022 – meaning a further rise of £128, to £1,405. Adding the two increases together gives a total of £267.

Looking ahead to the April 2022 review, Joe Camish, analyst at Cornwall Insight, told the Financial Times that it is ‘conceivable that the level of the price cap could rise by 10 per cent or more if wholesale prices keep climbing.’

Amid record electricity prices in recent weeks, Henry Edwardes-Evans, an energy analyst at S&P Global Platts, told the London Evening Standard: ‘Customers will feel this and it will filter through into bills if this continues.’

Another expert commenting on the rises was Rajiv Gogna, a partner at LCP Energy Analytics, who told the FT: ‘Unfortunately we are going to see more high and volatile prices which is going to feed through to consumers.’

Natural gas rose by as much as 18 per cent to 189p per therm after the blaze at the interconnector known as the Interconnexion France-Angleterre (IFA), in Sellindge, Kent, which links the British and French power grids. 

Energy crisis: Energy bills for UK homes are set to soar this autumn and winter after a fire at a National Grid power facility in Kent (pictured) sent gas prices soaring to record highs

And UK electricity prices jumped by 19 per cent to £475 per megawatt hour (MWh).

Downing Street said it recognised that rising electricity prices meant it was a ‘challenging time’ for consumers and businesses. The Prime Minister’s official spokesman said: ‘We absolutely recognise this is a challenging time.

‘We already have processes in place to support the public – the energy price cap is continuing to save 15 million households up to £100 per year.

‘We plan to trial automatic switching for those who are on expensive tariffs and are extending the warm home discount so a total of 2.7 million pensioners, and low-income households get £150 knocked off their bill each year.’

Asked about assistance for businesses, the spokesman said: ‘We have put in extensive support for businesses throughout the pandemic. I’m not aware of any plans coming forward, but of course we will continue to support businesses to grow.’

The fire in Kent took place in the early hours of yesterday. The site was evacuated and it is understood there were no injuries while Kent Fire and Rescue sent 12 crews to the scene and battled the blaze for more than 12 hours.

This MoneySavingExpert graph shows how wholesale prices have gone from record lows in May 2020 to record highs now

Two fire engines and one height vehicle remained on site as late as 8pm last night as crews continued dampening down remaining hotspots. 

The fire damaged an interconnector running under the English Channel, the National Grid said in a statement.

Electricity interconnectors are high-voltage cables that connect the electricity systems of neighbouring countries, and allow them to share excess power.

The landing point for the subsea cable linking France to the UK is Folkestone, from where underground cables connect to the Sellindge converter station and then onto the UK’s transmission station. 

A spokesman 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.

National Grid said the cable will be offline until September and at half capacity until March

The IFA 1, which was still on fire last night, brings in two megawatts per hour, enough to power 2million homes and more than the total amount generated by wind in the UK. It was working at half-capacity, or just one megawatt per hour, when hit.  

Yesterday the incident intensified a spike in prices, which have already been surging due to a toxic cocktail of lower supplies from Russia, lack of gas in storage in Europe and spiralling prices for liquefied gas shipped in ocean tankers.

The 189p per therm is more than double the amount paid two months ago, and a fourfold increase on September 2020.

The price crunch is likely to pile pressure on families and companies during a crucial period of the post-Covid recovery.

This graphic shows how the Interconnexion France-Angleterre subsea electricity operation works between France and Kent

Bills for domestic customers not on fixed tariffs could jump, though those on standard tariffs may not see a rise until the price cap is reviewed next spring.

But energy-heavy businesses such as manufacturers are feeling the heat, warning that companies are being forced to temporarily suspend production and could need to ration power.

It has also raised concerns about supplies. The coal station West Burton A was fired up earlier this month to meet electricity needs after a drop in wind.

National Grid said: ‘Our investigation is ongoing and we will update the market with any changes as necessary.’

But Tom Edwards, of Cornwall Insight, warned that ‘if anything goes wrong, we might not have anything left in the back pocket’.

The IFA (thick line in green) is one of a series of electricity interconnectors between Britain and other parts of Europe

He added: ‘If a nuke trips offline or something else big, that could cause issues because we might not have anything to replace it.’

Verity Davidge, director of policy at manufacturers’ association Make UK, said unprecedented energy costs ‘risk putting the brakes on any recovery’.

Davidge added: ‘Around two-thirds of manufacturers are saying they are now feeling the impact of energy price rises which when combined with inflation burdens, increased cost of raw material and wage pressures are coming together into a perfect storm to halt the green shoots of recovery so desperately needed in the sector.’

Gareth Stace, director general of UK Steel, said extortionate power prices were already forcing some steel makers to suspend their operations.

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