Spark spread

Spark spread is the difference between the wholesale price of electricity and the cost of the fuel used to generate it. The wholesale price is the price in the market in which electricity generators sell to distributors.

The price of fuel is important because it is the main variable cost in the generation of electricity. This makes spark spread a measure of contribution per unit.

Spark spread will vary between plants using different fuels and may vary even between plants using the same fuels. It should be positive for any plant that is actually in current operation (otherwise the there would be a negative contribution, and presumably a shutdown).

In the long term the spark spread should be large enough to provide electricity generation companies (and most individual power plants) with an adequate RoI.

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