Platts to keep methodology for UK power calculations unchanged

Following further market consultation, S&P Global Platts has decided to continue using European Emission Allowances in its UK power calculations, namely clean spark and dark spread, coal switching price and baseload comparison calculations, beyond May 19, 2021.

Platts had previously said that it would start databasing separate UK emissions allowance prices and use these values in its UK power calculations from May 19 https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/040121-platts-proposes-to-database-uk-emissions-allowance-prices-and-use-them-for-uk-derived-calculations

Platts will monitor the new UK ETS market before moving ahead with changes to said calculations.

The UK formally left the EU Emissions Trading System on Jan. 1, 2021, as part of the country's withdrawal from the EU, and is currently in the process of setting up its own domestic UK Allowance (UKA) market. The relevant futures contract is expected to start trading on the Intercontinental Exchange from May 19.

Platts clean spark and dark spread calculations measure the profitability of power plants in the UK running on gas and coal.

The coal switching prices measure the theoretical threshold at which gas is more competitive than coal in power generation.

The baseload comparison calculations allow for comparison of the cost of providing baseload power through coal, gas or fuel oil fired power.

Current calculations factor in prices of European Emissions Allowances, based on the data from the European Energy Exchange (EEX). There will be no changes to the existing methodology. See details of codes below:

The full description of the methodology can be found on the p.6-7 of the European electricity specifications guide: https://www.spglobal.com/platts/plattscontent/_assets/_files/en/our-methodology/methodology-specifications/european_power_methodology.pdf

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