A fire in a subsea cable has dramatically reduced power imports from France until March, U.K.'s National Grid Plc said, deepening the energy crisis that threatens winter blackouts for millions.
The timing couldn't be worse. Before the fire, the U.K. was already experiencing a five-year low in spare winter capacity. Compound this with gas shortages and the lack of renewable energy sources, sending power prices on a record-breaking run. The country may experience grid chaos in the coming months.
"If we don't start to remedy the situation, we are going to be facing blackouts this winter," Catherine Newman, chief executive officer of Limejump Ltd., a unit of Royal Dutch Shell Plc, told Bloomberg on Thursday. "If things don't start to reverse soon, we will see the industry getting turned off across the board."
"If anything goes wrong, we might not have anything left in the back pocket," said Tom Edwards, a consultant at Cornwall Insight Ltd., an adviser to the government and utilities. "If a nuke trips offline or something else big, that could cause issues because we might not have anything to replace it."
Britain receives power via six subsea cables, and two of them are connected to France's power grids of more than 56 nuclear power plants.
The cable's total capacity will be shut off until March 2022. The shortage is expected to exacerbate power price volatility when peak demand is seen in the winter months.
"The outage is going to lift the potential for price volatility as long as its offline," said Glenn Rickson, head of power analysis at S&P Global Platts.
The compounding energy crunch is fueling concerns about inflation when the economy is still recovering from the pandemic.
The subsea cable interruption doesn't mean blackouts will be seen in the immediate future. Still, as power demand increases as temperatures turn cooler, demand will spike and strain the grid.
The energy crunch has already forced two fertilizer plants in the country to shutter operations on Wednesday. C.F. Industries Holdings Inc halted its Billingham and Ince manufacturing facilities "due to high natural gas prices.
The broader issue is that economic impacts due to an unstable power grid could hinder economic development this winter.
It's only a matter of time before U.K. politicians take action to shield consumers from high energy prices.