CHP - Summer 2021 Spark Spread trend

The above graph shows the gas, peak electricity price and associated Spark Spread quoted for Summer 2021 for the period 01/12/20 to 03/03/21.

Whilst gas rose from a low of 35p/Th in early December to a peak of 45p/Th the Spark Spread stayed fairly constant around £20/MWh. But in the last month it broke free from this pattern and passed £22/MWh this week.

This ties in with an increase in the cost of EUETS carbon over the same period. Larger generators have to pay for EUETS / UKETS carbon and this helped to push up the price of electricity. But smaller embedded generators such as CHP are often outside the scope of the UKETS. This gives the latter the benefit of a higher sales price for electricity without the extra cost that has helped to drive the energy markets higher.