Enter Values

$ /MWh
On-peak electricity price per megawatt-hour
$ /MWh
Off-peak electricity price per megawatt-hour
MW
Contract capacity in megawatts
days
Peak weekdays in the delivery month (18-23)
Peak/Off-Peak Pricing Formula
Ratio = Peak Price ÷ Off-Peak Price
5x16 = 5 weekdays × 16 peak hours | Block Value = Price × Hours × MW
Ryan O'Connell, CFA
Calculator by Ryan O'Connell, CFA

Peak/Off-Peak Analysis

Peak/Off-Peak Ratio 1.57 High Spread
Spread $20.00/MWh
Weighted Avg $44.52/MWh
Peak Block Value $19,360
Off-Peak Block Value $6,160

Formula Breakdown

Peak Block = Peak Price × 16 hrs/day × Weekdays × MW

Spread Classification Guide

Classification Ratio Interpretation
High Spread ≥ 1.50 Strong load-shifting or storage arbitrage opportunity
Moderate 1.20 – 1.49 Typical peak premium for most markets
Flat < 1.20 Compressed spread (high solar, shoulder months)

Classifications based on typical US wholesale electricity market patterns.

Model Assumptions

  • Peak hours: 7am–11pm Mon–Fri (PJM/Eastern convention)
  • Peak hours per day: 16 (5x16 block)
  • Off-peak weeknight hours: 8 per weekday
  • Weekly weighting: 80 peak + 88 off-peak = 168 total hours
  • Off-peak block uses weeknight 8-hour strip only
  • Peak hour definitions vary by ISO (ERCOT, CAISO differ)
  • NERC holidays treated as off-peak (not modeled here)

For educational purposes. Peak/off-peak conventions vary by market.

Understanding Peak/Off-Peak Electricity Pricing

What is Peak/Off-Peak Pricing?

Peak/off-peak pricing reflects the fundamental reality that electricity cannot be economically stored at scale. During high-demand periods (weekday business hours), wholesale prices rise as more expensive "peaker" plants come online. During low-demand periods (nights and weekends), prices fall as only efficient baseload generation runs.

Peak Block Value
Monthly Value = Peak Price × 16 hrs × Weekdays × MW
Standard 5x16 on-peak block convention

Peak Hour Definitions by Market

There is no universal NERC standard for peak hours. Each ISO defines its own:

  • PJM/Eastern: HE 0800–2300 (7am–11pm), Monday–Friday
  • ERCOT: HE 0700–2200 (6am–10pm), Monday–Friday
  • CAISO: HE 0700–2200, Monday–Saturday (includes Sat peak)

This calculator uses the PJM/Eastern convention (16 peak hours x 5 weekdays = 80 hours/week).

Block Contract Types

5x16 On-Peak

5 weekdays × 16 peak hours = 80 hours/week. The standard peak block for commercial load and generation hedging.

Off-Peak Composite

Weeknights (8 hrs x 5 days) + full weekends (48 hrs) = 88 hours/week. Covers baseload and overnight industrial demand.

When to Use This Calculator

Use this calculator to analyze wholesale electricity pricing and estimate monthly block contract values. Common applications include:

  • Comparing peak vs off-peak pricing for load-shifting decisions
  • Estimating monthly revenue from power purchase agreements
  • Evaluating battery storage arbitrage potential
  • Understanding the "duck curve" effect on peak premiums
Related Analysis: For spark spread (gas-to-power) profitability, see the power-to-fuel spread calculators in our Commodities series. For more on peak/off-peak trading fundamentals, read Power Trading: Peak/Off-Peak Pricing.
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Frequently Asked Questions

The peak/off-peak spread is the price difference between on-peak hours (highest-demand weekday hours) and off-peak hours (nights, weekends, holidays). It reflects the cost gap between expensive peaker and intermediate generation during high demand versus cheap baseload and renewable generation overnight. A larger spread indicates greater incentive for load-shifting or storage arbitrage.

This calculator uses the common Eastern/PJM convention: on-peak is 7am–11pm (HE 0800–2300), Monday through Friday (16 hours × 5 days = 80 hours/week); off-peak is all remaining hours including weeknights and full weekends (approximately 88 hours/week). Definitions vary by market—ERCOT and CAISO use 6am–10pm, and CAISO includes Saturday on-peak. There is no single NERC standard.

"5x16" means 5 weekdays times 16 peak hours per day—the standard on-peak block. "16x8" is market jargon for the 16 peak plus 8 off-peak hours within a weekday. Monthly peak energy equals MW times 16 hours times peak weekdays in the month. For example, a 1 MW 5x16 contract in a 22-weekday month delivers 1 × 16 × 22 = 352 MWh of peak energy.

Multiply the peak price by peak hours per day (16), by the number of peak weekdays in the month, and by contract size in MW. Example: 1 MW at $55/MWh over 22 weekdays equals $55 × 16 × 22 × 1 = $19,360. This is the total revenue (or cost) for the peak block over the delivery month.

Season, weather, fuel costs, and renewable penetration drive spread changes. Summer air-conditioning load can push peak premiums to $30–$60/MWh or more, while heavy midday solar (the "duck curve") can compress or even invert the spread during shoulder months. Natural gas prices directly affect marginal generation costs and thus peak pricing levels.

This calculator flags a ratio above 1.5 as a high spread (strong arbitrage or load-shifting incentive), 1.2 to 1.5 as moderate (typical), and below 1.2 as flat (compressed, common in high-renewable periods or shoulder seasons). A high spread means significant value in shifting consumption from peak to off-peak hours or deploying battery storage for arbitrage.
Disclaimer

This calculator is for educational purposes only and provides simplified peak/off-peak pricing analysis using the PJM/Eastern hour convention. Actual electricity market pricing involves additional factors including locational marginal pricing (LMP), congestion, losses, ancillary services, and capacity payments. Peak hour definitions and NERC holiday schedules vary by ISO. This tool should not be used as the sole basis for trading or investment decisions.

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