What is power tolling?
In a tolling agreement, the plant owner (toller) provides the power station; the counterparty (toll payer) supplies the fuel (e.g. natural gas) and receives the electricity. The toll payer pays a toll — a fee per MWh or per kW-month — for the right to use the plant. So the toll payer’s margin is: power revenue minus fuel cost minus toll minus any variable O&M. If that margin is positive, running the plant is profitable for them; if negative, they would lose money.
Who does what?
- Plant owner (toller): Owns the asset, receives the toll (and sometimes a share of the spread).
- Toll payer: Brings gas (or other fuel), pays the toll and variable costs, sells the power. Their profit = power price − fuel cost − toll − variable O&M.
Tolling is common for gas-fired plants where a trader or utility wants exposure to power without owning the asset.
Formulas
All per MWh. Heat rate is in MMBtu/MWh; gas in $/MMBtu; power in $/MWh.
Why use this calculator?
You can quickly see how power price, gas price, heat rate, and toll interact. Raise gas or toll and watch net margin drop; raise power and see when the deal flips into profit. The break-even power price tells you the minimum power price needed to cover fuel, toll, and O&M.