Spreads often show correlations and how they might be linked but the correlations are breaking between Winter and Summer throughout the curve.
The clean spark spread for Summer 07 is £9.94. The clean dark spread for Summer 07 is £7.26.
The clean spark spread for Winter 07 is £5.68. The clean dark spread for Winter 07 is £14.02.
Therefore during the Summers the gas plant will generate first and during the Winter 07 the coal price will generate first. This is unlikely fuel costs between seasons vary because of storage and demand, and whilst the gas price is more expensive in the Winter so is the corresponding power and coal price.
These spreads suggest that the premium associated with Winter gas is too high and is being translated into the spark spread going forward. In reality, traders should be rolling the shorts i.e. shorting the summer and buying back during the winter this arbitrages out the differences so that the premium associated with winter gas is eroded.
24 October 2006
Sparkers dictate the movement of the markets, but it is never as simple as it is cracked up to be. read more...
16 October 2006
Some long term hedging is effecting the market and the lack of buyers has caused the markets to turn South, although oil has bobbled up on Friday the long term trend still appears to be down. read more...
04 May 2006
Dark and spark spread prices are causing some concern, as they are not fundamentally changing the way the world looks at fuel for producing power. read more...
30 January 2006
Spark and dark spreads show that the need for gas during the Summer is low, so we should see a hike in spark spread and a fall in gas prices, but it doesn't always work like that. read more...
17 June 2005
"'Curiouser and curiouser,' cried Alice!" Alice and Wonderland read more...
Natural Gas the one to watch
The power curve ended the week down feeling the pressure from the fuel curves as well as healthy supply situation. Looking forward, the gas market is the one to watch as it continues to dominant the fuel mix accounting for 50% of generating plant. read more...
08 March 2010
The power curve ended the week down feeling the pressure from the fuel curves as well as healthy supply situation. Looking forward, the gas market is the one to watch as it continues to dominant the fuel mix accounting for 50% of generating plant. read more...
Gas Imports Keep the System Balanced
Two GBAs in one week, use of Interruptible Supply Contracts and record temperatures but the system remains balanced and gas prices even drop during trading. read more...
08 January 2010
Two GBAs in one week, use of Interruptible Supply Contracts and record temperatures but the system remains balanced and gas prices even drop during trading. read more...
Gas Balancing Alert Issued
National Grid issues a rarely used Gas Balancing Alert following both supply and demand pressures. With severe weather warnings in place and freezing temperatures set to continue, will this be the last of the GBAs? read more...
05 January 2010
National Grid issues a rarely used Gas Balancing Alert following both supply and demand pressures. With severe weather warnings in place and freezing temperatures set to continue, will this be the last of the GBAs? read more...
Out with the Old, In with the New
During the last day of trading in 2009, the UK Power curve closes down but what will the New Year hold in store? read more...
31 December 2009
During the last day of trading in 2009, the UK Power curve closes down but what will the New Year hold in store? read more...
Where's the certainty?
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
23 December 2009
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
Where's the certainty?
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
23 December 2009
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
Dong buy Severn Power
The Danish energy utility, Dong have bought one part of Carron Energy. read more...
10 March 2009
The Danish energy utility, Dong have bought one part of Carron Energy. read more...
Green Light for additional 3.92GW of Capacity
The development of 3.92GW of power plant capacity was given the green light yesterday by the Department for Energy & Climate Change. read more...
06 February 2009
The development of 3.92GW of power plant capacity was given the green light yesterday by the Department for Energy & Climate Change. read more...
A sliding Prompt
A comfortable system in terms of supply margins left the prompt power market sliding. read more...
14 November 2008
A comfortable system in terms of supply margins left the prompt power market sliding. read more...
Cashing in on the Power Price Highs
A number of coal-fired power stations, that opted out of the Large Combustion Plant Directive (LCPD), appear to have exceeded operating expectations to take advantage of high summer power prices read more...
29 August 2008
A number of coal-fired power stations, that opted out of the Large Combustion Plant Directive (LCPD), appear to have exceeded operating expectations to take advantage of high summer power prices read more...
Where's the certainty?
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
23 December 2009
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
Drax up against it
Drax profit margins fall as competition will only get harder. read more...
05 March 2008
Drax profit margins fall as competition will only get harder. read more...
Prompt and Curve diverge
Could the change in price be a trading signal. read more...
19 February 2008
Could the change in price be a trading signal. read more...
Gas capacity change in 2008
Will NG announce to the market what more capapcity could be availbel at the end of the year? read more...
12 February 2008
Will NG announce to the market what more capapcity could be availbel at the end of the year? read more...
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