I hadn't seen this story before, but it sure looks like a nasty fire.
The "lake" referred to is really a wide point in the estuary of the River Dart.
If you play around with the Google map you'll find several spots around the south coasts of Devon and Cornwall which have similar kinds of estuaries: Try Saltash/Plymouth (River Tamar - the boundary between the two counties), and Falmouth up to Truro (Carrick Roads) for two more examples.
