Just after midnight today, a fire at a power cable linking electricity supplies between the UK and France broke out.
National Grid announced that ‘a fire had broken out at the IFA1 interconnector site in Sellindge near Ashford in Kent’, Financial Times reported. After the fire, the power cable is now not operating.
National Grid said that emergency services were immediately sent to the site. Despite that, however, the problem has resulted in reduced imports to the UK, which consequently caused an increase in gas prices. In recent weeks, the wholesale energy prices reached record highs so this event just made things worse.
Because of the fire, gas-fired power generators will have to work harder in the incoming days to make up for the loss of imports, Financial Times explained. Until at least October 13 there will be less electricity available to the network in the UK.
What is the role of the interconnector?
A spokeswoman of the National Grid said ‘Interconnectors are subsea electricity cables. The IFA cable joins the UK with France and allows electricity to be transported between the two countries.’
The interconnector has been operating since 1986 and its role is to import mainly nuclear-generated power from France to the UK. The IFA1 interconnector is not the only power cable between Britain and France. There is also an IFA2 interconnector that luckily was not affected by the fire.
In addition to that, the UK has six other interconnectors. Altogether they have a capacity of 6GW. The government also plans to increase the capacity of interconnectors to at least 18GW by 2030.
What is the scale of the damages after the fire?
Unfortunately, the issue is not an easy one to fix. The disruption caused by the fire might require weeks or even months of fixing.
Glenn Rickson, head of European power analysis at S&P Global Platts Analytics, said that ‘It couldn’t come at a worse time for the UK and I would expect [electricity prices] to spike strongly, even relative to the new records seen this week.’
Flows of electricity through the IFA1 power cable have been halted. France is the biggest supplier of electricity to the UK so the fire can immensely affect the integrity of the UK’s energy market.
Bloomberg reported that ‘firefighters have been battling the blaze since the middle of the night and smoke continues to billow from the site.’ It can take several hours to put out the fire and even after that is done, the cable will not be operational for months to come.
How have gas prices been affected?
After the fire, British power prices jumped almost 19%, Reuters reported. They almost reached the highest price noted earlier this week:
|Electricity prices after the fire||475.00 pounds per megawatt-hour (MWh)|
|A record-high from this week||540 pounds per megawatt-hour (MWh)|
UK electricity prices are now most expensive in Europe, according to S&P Global. In recent weeks they tripled compared to last year. The price surges have been caused by a shortage of generation.
As the winter is approaching and the demand for power will be even higher as people will need to heat their homes, the prices are expected to remain very high.
What do higher energy prices mean for energy suppliers?
The spikes in energy prices pose a significant challenge to many of the UK suppliers. In fact, they are the main reason why so many energy providers have been going out of business in recent months.
As the prices are going up, suppliers are announcing changes to how much they charge their customers.
The Guardian reported that: ‘Eon UK and Scottish Power have raised the price of their standard gas and electricity tariffs by 12% to an average of £1,277 a year. Ovo Energy, the UK’s second largest energy supplier, will raise the price of its standard dual-fuel energy tariff by 12.25% to an average of £1,276.49 a year from 1 October, just 51p shy of the cap set by Ofgem this month.’ Similarly, ‘EDF Energy announcing it was putting up prices by 12% to an average of £1,277 a year for its 2 million customers on standard dual-fuel tariffs.’
Some of the suppliers have not yet announced price increases but they will most likely do it in the next few days.
Unfortunately, if the prices keep rising it is also likely that some of the UK suppliers will cease to trade. If that happens, however, Ofgem provides their customers with protection so that they do not lose any money and their energy supply is not disrupted.
What do higher energy prices mean for customers?
In response to increasing wholesale energy prices, UK suppliers have announced that they would raise the prices of their gas and electricity tariffs. Of course, Ofgem prevents the suppliers from setting the prices too high. Nevertheless, energy providers have said that the new prices would reach the maximum limit they are allowed to introduce.
Moreover, Ofgem’s price cap changes sometimes to adapt to the situation in the energy market. Now, it is expected to the highest level it has ever reached since it was introduced in 2019.
Ofgem announced that domestic customers have to brace for higher energy bills.
Those who pay by direct debit can expect the following changes:
|Current Average Energy Bills||£1,138 a year|
|Expected Average Energy Bills from October||£1,277 a year|
Those who use prepayment meters will see the following change:
|Current Average Energy Bills||£1,156 a year|
|Expected Average Energy Bills from October||£1,309 a year|
Many suppliers have been replacing old tariffs and competitive deals with new more expensive ones. Of course, all suppliers want to offer cheap prices and high-quality services but in such challenging times, that is becoming impossible. Unfortunately, if the situation does not improve, cheap energy tariffs might soon become a thing of the past and customers will have no choice but to agree to the less favourable prices than before.