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In response to your article, I have written the article "Financing and Developing Wind Projects," in the Electricity Without Price Controls (EWPC) Blog, here in Energy Central Network.
Under EWPC, any upgrades to the transportation (transmission and distribution) system are to be done with a long run integral perspective to guarantee maximum social welfare.
best, Joey Gimenez
joeygimenez@gmail.com
Just some time ago I was reading about "spark spread"and the concept to my surprise was
quite new to many power professionals Italked to subsequently.Therefore I thought to start a discussion on "spark spread"and the related concepts in energy trading by the following definition...members are requested to add and give their valuable comments so that
we can in three months time have a small book prepared for the power professional.
Spark Spread - The spark spread reflects the costs or anticipated costs of producing power from a specific facility. It can be used as a method of converting millions of Btus to megawatt hours and vice versa, and thus relates well to the electricity and natural gas futures contracts. The spread is simply the heat rate (a proxy for efficiency) of a specific generating unit or power system (the number of Btus needed to make one kilowatt hour of electricity), multiplied by the cost of energy expressed as dollars per British thermal units (Btus). For example, if it takes 10,000 Btus to make one kilowatt hour of electricity, the formula can be simplified by multiplying the price per million Btus (MMBtu) by 10 to equate one MMBtu of natural gas to one megawatt hour (Mwh) of electricity. The usefulness of the spread evaluation is dependent on the market price for power which reflects the relationship of the supply and demand for power, not the efficiencies of the generating units. Other costs affecting the price of power using the spark spread evaluation include those of gas transportation, power transmission, plant operations and maintenance, and fixed costs. Because the electricity futures contract is specified in lots of 736 megawatt hours, and the natural gas futures contracts are specified in units of 10,000 million Btus, one power contract equates to 0.736 natural gas contracts.
The term dark spread refers to the similarly defined difference between cash streams (spread) for coal-fired power plants. These indicators of power plant economics are useful for tracing energy markets. For operating or investment decisions published "spread" data are not applicable. Local market conditions, actual plant efficiencies and other plant costs have to be considered.Further definition of clean spread indicators include the price of carbon dioxide emission allowances.
For the formula oriented readers:
Spark Spread = Cost of Electricity - [ (Cost of Gas) * (Heat Rate) ] = $/Mwh - [ ($/MMBtu) * (MMBtu / Mwh) ]
Both prices in the above formula must be in the same currency and must refer to the same energy unit (usually MWh).
--Soft start and stopping of generation - Soft start and stopping of generators can be ensured so that sudden injection/withdrawal at wind mills can be avoided.
--Frequency response of generators - Wind mills can function on the free governor mode of operation (FGMO) basis keeping in mind that present day wind generators can vary generation in response to change in frequency.
--Withstanding transient line fault - Wind generators should withstand the voltage dip caused during the transient fault clearance time so that the generator continues to generate once the fault is cleared.
--Short term estimation of wind generation - It is a must to have short term prediction of the wind generation so that some advance planning can be done.