The definition
Capacity factor is a ratio that shows how much electricity a power plant actually produced over a period compared with the most it could have produced if it had run at full power the entire time. It is usually quoted as a percentage over a year.
The formula is:
capacity factor = actual energy produced / (rated power x hours in the period)
The rated power, also called nameplate or installed capacity, is the maximum output the plant is designed to deliver. Two units matter here. Power is measured in watts, kilowatts or megawatts, and energy produced over time is measured in kilowatt-hours or megawatt-hours. If those terms are unfamiliar, the article on energy units explains how they relate.
A worked example
Take a plant with a rated power of 100 megawatts (MW). A year has 8,760 hours (365 days x 24 hours). If it ran at full power all year, it would produce:
100 MW x 8,760 hours = 876,000 megawatt-hours (MWh).
Suppose it actually produced 438,000 MWh. Then:
438,000 / 876,000 = 0.5, or a capacity factor of 50 percent.
A second example with a single wind turbine rated at 2 MW, with a capacity factor of 35 percent:
2 MW x 8,760 hours = 17,520 MWh at full output, and 17,520 x 0.35 = 6,132 MWh actually produced in the year. (Real turbines range widely, and 35 percent here is only an illustration, not a typical figure for any particular site.)
Why capacity factors differ
A capacity factor below 100 percent does not necessarily mean a plant is poor. Several things pull it down, and they differ by source.
- Fuel or resource availability. Solar plants produce only in daylight, and output falls under cloud. Wind turbines produce only when the wind blows within their operating range. Hydropower depends on water supply.
- Planned and unplanned outages. Every plant needs maintenance, and some need refueling. Equipment faults add downtime.
- Demand and economics. A plant may be turned down because the grid does not need its power, or because cheaper sources are available. Gas plants built to cover peaks may run only a small share of the year by design.
- Grid limits. If transmission lines are full, output may be curtailed even when the resource is available.
Comparing source types in general terms
Without quoting figures that change by country and year, some general patterns are widely observed:
- Nuclear plants are designed for steady operation and often have among the highest capacity factors, with downtime mostly for refueling and maintenance.
- Coal and gas capacity factors range widely. Where they run steadily they can be high, but where they act as backup or compete with cheaper sources, they can be much lower. Older plants often run less than they used to.
- Hydropower varies with rainfall and with how the reservoir is operated, since a plant may be sized to deliver bursts of power when needed.
- Wind is typically lower than steady thermal plants, and offshore sites tend to be higher than many onshore sites because of stronger winds. See how wind power works for the factors that affect output.
- Solar is typically lower still in most places, because night removes about half of each day, and it varies by latitude and climate.
- Geothermal can run steadily where the resource is good and often has a high capacity factor.
Treat any specific number you read with care. Values depend on the year, the technology, the location and how the data is calculated, and different agencies publish different figures.
What capacity factor does not tell you
This is where the ratio is most often misused.
It is not efficiency. Efficiency describes how much of the input energy becomes electricity. Capacity factor describes how much of the maximum possible output was actually delivered. A solar panel can be modestly efficient yet face no fuel cost at all, since sunlight is free, so a lower capacity factor is not the same as wasting fuel.
It is not a measure of value. A plant with a lower capacity factor can still be useful, for example a plant that runs briefly but at exactly the moments when the grid is under stress. Likewise, a high capacity factor does not say whether the electricity was cheap, clean or needed at that time.
It does not compare capacity directly. Because the factors differ, installing 1,000 MW of solar does not give the same yearly energy as 1,000 MW of a plant running most hours. To meet the same energy needs, a grid with more variable resources typically needs more installed capacity, plus tools such as energy storage and transmission to use it well. Planners also use measures of how much capacity can be counted on during peak demand, which is a different number.
It changes year to year. A windy year, a dry year or a long outage will move the figure. Averages over several years are more informative than a single year.
Reading a figure sensibly
When you see a capacity factor, it helps to check what period it covers, whether it is for a single plant or a whole fleet, and whether it is based on nameplate or net capacity. With these in mind, the ratio is a handy shorthand for understanding how an installed plant behaves in practice, and why the capacity of a grid and the energy it delivers are different things.
This article is general information for learning, not engineering or investment advice.