Understanding Spark, Dark, Clean-Spark & Clean-Dark Spreads: Why They Matter in Power & Energy Markets
- Timothy Beggans
- 2 days ago
- 2 min read
In energy markets, spreads such as spark and dark (and their “clean” variants) reveal the economic incentives for power-plant dispatch. They also act as support or resistance levels for underlying fuels — especially natural gas.
Spark Spread
The spark spread measures the theoretical margin for a gas-fired generator.
Formula:
Spark Spread = Electricity Price − (Natural Gas Price × Heat Rate)
Dark Spread
The dark spread applies the same idea to coal-fired power.
Formula:
Dark Spread = Electricity Price − (Coal Price × Heat Rate)
Clean Spark Spread
In markets with carbon pricing, the clean spark spread subtracts both fuel cost and the cost of CO₂ emissions.
Formula:
Clean Spark Spread = Electricity Price − (Natural Gas Price × Heat Rate) − (Carbon Price × Emissions Factor)
Clean Dark Spread
The clean dark spread incorporates carbon cost into the economics of coal generation.
Formula:
Clean Dark Spread = Electricity Price − (Coal Price × Heat Rate) − (Carbon Price × Emissions Factor)
A negative clean dark spread signals that coal generation is uneconomic once emissions costs are included — often shifting dispatch toward gas or renewables.
Why Spreads Matter — Example from 2025 U.S. Markets
According to the U.S. Energy Information Administration, spark and dark spreads in PJM widened between 2023 and 2025. The average spark spread rose from roughly $21/MWh to about $28/MWh, while dark spreads climbed from –$14/MWh to around $21/MWh.
This tightening gap indicates that coal temporarily regained competitiveness relative to gas. When dark spreads rise sharply, coal demand finds support — which can cap natural-gas rallies or create resistance zones.
Monitoring these spreads — especially their clean variants — provides valuable insight into marginal generation, fuel switching, and the growing impact of carbon pricing on power-sector economics.
#EnergyMarkets #PowerGeneration #NaturalGas #Coal #CleanEnergy #CarbonPricing #EnergyTrading #ElectricityMarkets
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