How value moves between coal operators, renewable operators, and ARC buyers.
SPARC doesn’t buy out a coal plant or terminate an existing PPA. Behind the scenes it disaggregates the contract into defined delivery bands. A renewable generator acquires a band, delivers the MWh, and the coal plant produces less. The contract remains intact. Production shifts one MWh at a time.
When a coal operator assigns fulfillment of a SPARC stream, it avoids coal cost, receives risk relief, and may release value linked to obligations actually assumed by the delivery party. The operator still retains the value needed for fixed-cost recovery, margin, residual PPA standing, and obligations it keeps. No loss required. No goodwill expected.
The coal operator remains the PPA-facing counterparty. It assigns fulfillment of a defined SPARC stream only if its retained value is at least equal to self-delivery. In this illustrative firm-band case, it keeps the capacity value needed for fixed-cost recovery, margin, residual PPA standing, and retained obligations, while releasing value linked to avoided coal cost, risk relief, and obligations actually assumed by the delivery party.
The delivery party fulfills the SPARC stream and carries the agreed delivery, balancing, replacement-power, and performance obligations. Its required value is delivery cost plus delivery risk. In this case, the available delivery payment covers $54/MWh of an $81/MWh requirement. The residual $27/MWh must come from ARC value, recognized grid value, or another agreed top-up source.
The available stream payment rises directly with avoided fuel cost. When coal is more expensive, the coal operator can transfer more value to the delivery party while still remaining whole. The delivery cost stays fixed. The residual gap that ARC or recognized grid value must close shrinks.
Different stream designs produce materially different economics. Delivery cost and performance risk drive the delivery party's required value. Released capacity or availability value and recognized grid value improve clearing headroom where they are allocated to the delivery party.
| Stream type | Delivery cost | Performance risk | Capacity value | Grid value | Clearing ease |
|---|---|---|---|---|---|
| Firm daytime bandSolar-matched; e.g. 06:00-18:00 dispatch window | Low | Low | High | Med-high | Highest |
| 12-hour firm blockExtended band; requires storage for overnight delivery | Medium | Medium | High | Medium | High |
| Seasonal blockDefined high-production season; lower year-round obligation | Low-med | Low | Medium | Low-med | High |
| Host-managed dispatchSmall RE slice; host retains TSO obligations and absorbs dispatch variability | Low-medium | Low | Low-medium | Medium | High |
| Flexible / dispatch-linkedRE must follow coal dispatch signals; replacement-power risk high | Very high | High | Low | Variable | Lowest |
Delivery cost and performance risk raise the delivery party's required value. Released capacity value and recognized grid value improve clearing headroom.