“Spark spread” refers to the difference between the cost of electricity and the cost of fuel on a per-MMBTU basis. This metric is often considered when recommending equipment retrofits that require fuel switching. A spark spread of at least $12 per MMBTU is considered the threshold for economic viability of Combined Heat and Power (CHP) systems. However, this study shows that an increase in the electric utility rate has an impact on the spark spread required to maintain the economic viability of a CHP project. This challenges the paradigm that a single value for spark spread can be used as a “rule of thumb” for determining the economic viability of CHP projects. As utility rates increase, so does the importance of understanding the relationship between spark spread and the economic viability of projects.

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