The incident occurred at the sub-station on Spring Gardens, next to the East Coast railway line, at about 5pm today. Five crews from Lincolnshire Fire and Rescue are at the scene, while police have also blocked off the area. The blaze involves gas cylinders and there is a risk of it spreading to another sub-station.
Trains on the East Coast Mainline are currently being diverted or delayed by up to half an hour, with National Rail adding disruption is likely to continue until at least 9.30pm.
Eyewitnesses describe hearing a fire engine approach the sub-station, before an explosion shortly afterwards.
Judi Brooks, at employee at Kennelgate on London Road, said: “The windows shook, it was like an earthquake, that’s the only way I can describe it.”
A spokesperson for Lincolnshire Police confirmed: “We and Lincolnshire Fire and Rescue were called to the EON electricity sub-station at Spring Gardens, London Road, Grantham about 5.15 this evening.
“We have been asked to close off London Road (the A52) and some of the side roads (including Spring Gardens) whilst Fire and Rescue deal with the fire.
“It is not known at this stage what caused the fire and we do not believe anyone has been injured.”
Onlookers gathered on London Road but were asked to move back, with a policewoman confirming that there was a risk a second sub-station could be hit by the fire.
The plumes of black smoke are visible in villages surrounding Grantham, and there were reports of the fire being seen as far away as Derby.
The power is reportedly out at the railway station and traffic lights are also said to be down.
Offices and shops across the town were left without lighting and in some cases customers were asked to leave stores during the emergency.
Western Power have confirmed that 2,351 customers are currently without power in the town.
A traveller at the station said: “All the power is out at the train station and apparently traffic lights are down.
“I saw plumes of smoke when we pulled into the station.
“I heard someone say that they had had to call the station at Derby - and they could see the smoke.”