Baseload GB clean spark spreads (CSS), a measure of CCGT profitability, fell steadily across 2017-2020, before rebounding sharply on a combination of tight power market and gas market volatility in 2021 and 2022. Forward baseload CSS, however, show the market pricing an accelerated continuation of the pre 2021 trend, with baseload CSS falling sharply on (1) rising renewable generation pushing gas out of merit across off-peaks, and (2) higher gas and carbon prices increasing the price differential between thermal and renewable prices.
Peak clean spark spreads are showing much more resilience, with healthy winter peak CSS priced in until at least 2028, highlighting the strong continued need for CCGT across winter peaks. Whilst available CCGT capacity has fallen in recent years, rumours of the mothballed Calon CCGTs returning to market have been circulating, potentially adding some additional much needed firm flexible capacity to the GB power mix.