The spark spread as a measure of wholesale electricity´s economic reliability

Summary form only given. The "spark spread" refers to the difference between the price of power in the wholesale market at pre-defined time blocks and the cost of fuel and other variable operating costs, converted at a given generation plant\´s heat rate to a consistent $/MWh. This paper evaluates the spark spread across representative regions of the USA, focusing on its level, variance and time-of-day and seasonal features. These historical patterns cannot be counted on to necessarily repeat themselves in the future, so fundamental-based outlooks are also provided in order to show the price dampening effects of new technology additions, and the uncertainty presented by market imbalances and resulting volatility drivers of the spark spread.