the relationship between the price of electricity and the price of natural gas or other fuel used to generate electricity. The spark spread reflects the costs, or anticipated costs, of producing power. It can be used as a method of converting millions of British thermal units ( Btu's) to megawatt hours, and vice versa. The spread is simply the heat rate (a proxy for efficiency) of a specific generating plant or power system (the number of Btu's needed to make one kilowatt hour of electricity), multiplied by the cost of energy expressed as dollars per Btu's.
the difference between the price of electricity sold by a generator and the price of the fuel used to generate it, adjusted for equivalent units. The spark spread can be expressed in dollars per megawatt hour (MWh) or dollars per million British thermal units (mmBtu) or other applicable units. To express it in $/MWh, the spread is calculated by multiplying the price of gas, for example (in $/mmBtu), by the heat rate (in Btu/kilowatt hour), dividing by 1,000 and then subtracting the electricity price (in $/MWh). Also called a spark arbitrage.
The difference between market price and the cost of production.
The difference between the selling price of power plus ancillary services and the cost of fuel.
Is the difference between the cost of electricity and the cost of converting natural gas to electricity.
Price difference between electricity and the input commodity of a power plant (e.g. natural gas).
The differential between the price of electricity and the price of natural gas or other fuel used to generate electricity, expressed in equivalent units. See Gross Processing Margin.
The spark spread is the theoretical net income of a gas-fired power plant from selling a unit of electricity, having bought the fuel required to produce this unit of electricity. All other costs (operation and maintenance, capital and other financial costs) must be covered from the spark spread.
