Yesterday’s fire in Kent affecting IFA1, the UK’s biggest cross-border interconnector, has sent power prices to record highs, with 1GW remaining off the market, possibly throughout the winter.
The blaze at Sellindge, near Ashford, will prolong a halving of the trunk’s capacity. The link was due this weekend to return to its full 2GW after maintenance. First assessments by National Grid ESO are that its full throughput may not be restored until March.
With gas prices at record highs as Europe’s economies waken after lockdown, the blaze could not have come at a worse time.
Prices of electricity on the day-ahead market on the N2EX exchange soared to £2,500.01 per MWh for delivery between 7pm and 8pm, with an average daily price of £424.61. The average for August is £106.83, and across 2020 only £35.26 per MWh.
On 14 September, day-ahead pricing reached a record high, with a peak price of £2,500 per MWh, against the £40 per MWh average baseload price during 2019-20.
Prices yesterday (15 Sept) cleared at a still extreme £1,860 per MWh for evening peak. Prices on other interconnectors were also challenging; Britned cleared at Euros 2131 per MW/h.
Eight times high
Data from energy market analysts EnAppSys shows that so far in 2021, overall average prices have been more than double their equivalents for 2019-2020.
In September’s first two weeks, daily average prices have been eight times up on two year ago 2019.
Phil Hewitt, director of EnAppSys, was gloomy. “This fire at IFA1 is a major event; we could be looking at an extended outage.
“In the long run, we will lose 2GW of import to the GB markets whilst we are struggling at the moment with low margins.
In June, EnAppSys released analysis indicating that interconnector carriage to and from Britain is Europe’s most expensive.
A National Grid spokesman said today it expects to “continue supplying electricity safely and securely” despite the incident.
It added: “Our investigation is ongoing and we will update the market with any changes as necessary.”
The link can carry up to 2GW of power, and had been importing electricity from France in recent days, after UK prices hit a record high of £540 per MWh on wholesale markets.
Rising energy prices has been a key concern for economists in contributing to inflation hitting a nine-year high in August.
The silver lining of this is that the increased cost of energy makes renewables even more cost effective. That should incentivise yet more investment in on-site solar and offshore wind, so in turn we will reduce our reliance on fossil-fueled power and French nuclear.