Natural gas power plants have become increasingly attractive to investors, due to rising load growth expectations and the need for reliable grid balance. With coal plant retirements and a surge in intermittent generation, natural gas is critical for ensuring adequate supply. To guide this interest, Enverus Intelligence® Research (EIR) has created a market screening analysis that ranks U.S. regions based on factors such as forward power prices, gas feedstocks and power demand growth, helping investors identify top areas for natural gas development.
As part of the market screening analysis, EIR uses spark spreads—a measure of the difference between electricity market prices and the cost of natural gas in generation—as a key indicator of profitability for natural gas plants across ISOs. Spark spreads reflect the gross margin between fuel costs and electricity revenue. The market-implied spark spreads through 2031 shows the lowest average spark spreads in ISONE and CAISO, at $15/MWh and $16/MWh, respectively, while SPP and WECC record the highest, at $37-$38/MWh. These insights help evaluate market profitability and guide natural gas investment decisions across regions.
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