CTA · Core
Spark Spread
Power minus the fuel needed to generate it (usually gas, sometimes coal) — the electricity generator’s margin as a spread.
Definition
Spark ≈ power price − (gas price × heat rate) − other costs. Dark spark uses coal. Traded where power futures exist and are liquid enough (Europe more than most US hubs for systematic size). Heat-rate assumption is the hedge ratio.
Why it matters
It is the power-complex cousin of the crack. Capacity is small; expertise is high. Rare in a generic SG Trend clone.
Case
A European gas shock that lifts power more than the heat-rate hedge predicted. The residual was policy and merit-order, not a 20-day MA.
How to read it
Hub, heat rate, and whether they trade it systematic or discretionary. If there is no power desk, they do not have a spark sleeve.
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