Definition of Spark Spread
Both prices in the above formula must be in the same currency and must refer to the same energy unit (usually MWh).
A precise definition of a spark spread has to be given by the source publishing such indicators. Definitions should specify energy (electricity and fuel) prices considered (delivery point & conditions) and the plant efficiency used for the calculation. Also, any plant operating costs that may be included should be stated. (see: Methodology of Powernext).
Typically, an efficiency of 0.5 (50 %) is considered for gas-fired plants, and 0.38 (38%) for coal-fired plants (see: Methodology of Powernext). In the UK, a non-rounded efficiency of 49.13% is used for calculating the spark spread.
Both the UK and German Spark Spread tables use a fuel efficiency factor of 49.13% for the gas conversion. In reality, each gas-fired plant has a different fuel efficiency, but 49.13% is used as a standard in the UK market because it provides an easy conversion between gas and power volumes (25,000 therms of gas = 15 MWh of energy). The spark spread value is therefore the power price minus the gas cost divided by 0.4913, i.e. Spark Spread = Power Price – (Gas cost/0.4913).
As of August 2006,UK dark spreads were in the range of 10–30 £/MWh, while UK spark spreads were in the range of 4–9 £/MWh.
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