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Quantitative Finance · Glossary

What is Clean spark spread, clean dark spread?

Also known as: clean spark spread · clean dark spread

Definition 7.6 Markets III: Commodities, Energy and Crypto · Chapter 7 — Emissions and Environmental Markets

The clean spark spread is the spark spread minus the cost of the allowances for one MWh of electricity from a gas plant, Ppower−(Pgas+egPCO2)/ηgP_{\mathrm{power}} - (P_{\mathrm{gas}} + e_g P_{\mathrm{CO_2}})/\eta_g; the clean dark spread is the same for a coal plant.

Examples

Example 7.8 (Where gas beats coal)

With gas at 35 EUR/MWh35\,\mathrm{EUR}/\mathrm{MWh} of fuel, coal at 12 12\,, efficiencies of 55% and 40%, and emission factors of 0.202 and 0.341 tonnes per MWh of fuel (illustrative round numbers), a MWh of electricity emits 0.367 t from gas and 0.853 t from coal, and the switching price is 69.32 EUR/t69.32\,\mathrm{EUR}/\mathrm{t}. At 70 EUR/t70\,\mathrm{EUR}/\mathrm{t} and power at 100 EUR/MWh100\,\mathrm{EUR}/\mathrm{MWh} the clean spark spread is 10.65 10.65\, and the clean dark spread 10.32 EUR/MWh10.32\,\mathrm{EUR}/\mathrm{MWh}: gas is just ahead.

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