Skyrocketing Spark Spreads
June 21, 2021
The spark spread is a common metric for estimating the profitability of natural gas-fired electric generators. The spread is the difference between the price received by a generator for electricity produced and the cost of the natural gas needed to produce electricity. It is calculated using daily spot prices and plays a key role in the business case for natural gas generators to buy gas and produce electricity. While the Houston spread has gained the most year-over-year, New England has spiked 4.5X since April.