By Susanna Twidale and Nina Chestney
LONDON (Reuters) -A fire halted a power link between France and Britain on Wednesday, squeezing tight UK electricity supply further and sending prices to near record highs.
Day-ahead British power prices jumped almost 19% on the news, nearing record highs hit this week exacerbated by low wind supply and soaring gas prices.
National Grid said the fire prompted the evacuation of its IFA1 interconnector site in Sellindge in Kent.
“The fire at the IFA site essentially means the loss of 2 gigawatts (GW) of interconnection capacity between the UK and France which further tightens the supply situation in the UK,” said Roy Manuell, EU power and carbon analyst at ICIS Energy.
A spokesperson for National Grid’s electricity system operator (ESO) said Britain would have sufficient electricity supplies on Wednesday despite the incident.
“We currently have a sufficient buffer of spare capacity to operate the electricity system securely over this evening’s peak demand period,” he said in an email.
Wednesday's almost 19% price jump took British day-ahead electricity prices to 475.00 pounds per megawatt hour (MWh), close to a record high of 540 pounds MWh hit this week.
"The outage is going to lift the potential for price volatility as long as its offline.... and of course demand will get higher as we move further into winter,” said Glenn Rickson, head of European power analysis at S&P Global Platts Analytics.
National Grid said late on Wednesday the fire would mean 1 GW, or half of capacity, would remain offline until 27 March 2022.
"Our investigation is ongoing and we will update the market with any changes as necessary," a National Grid spokesperson said via email.
The other 1 GW capacity of the IFA1 link is currently offline due to planned maintenance which will be extended until Sept. 25, the spokesperson said.
The IFA2 interconnector, a second link between Britain and France commissioned in 2020, is operating and not affected.
(Reporting by Nina Chestney and Susanna Twidale; editing by Louise Heavens, Jason Neely and Marguerita Choy)