Capacity Factor

3 minute read

It’s not how much capacity (MW) you have - it’s how you use it (MWh).

The capacity factor quantifies the value of capacity. It’s the actual electricity (MWh) generated as a percentage of the theoretical maximum over that same time period (commonly a year).

To calculate the capacity factor on an annual basis for a 2 kW generator that generated 10,000 kWh over the year:

Annual capacity factor = Actual Generation / Maximum Generation

Annual capacity factor = 10,000 kWh / 2 kW * 8760 hrs = 57 %

Three reasons why capacity will not generate at full output are maintenance, unavailability of fuel and economics.

maintenance

Burning fossil fuels creates a challenging engineering environment. The core of a gas turbine is high pressure & temperature gases rapidly rotating blazing hot metal. Coal power stations generate electricity by high pressure steam forcing a steam turbine to spin incredibly fast.

These challenges lead to fossil fuel plants needing a lot of maintenance. The time when the plant is being maintained is time the capacity isn’t generating electricity.

Renewables plants require less maintenance than a fossil fuel generator. No combustion means there is less thermal and mechanical stress on equipment.

availability of fuel

Renewables come ahead in terms of maintenance, but they fall behind due to a constraint that fossil fuel generation doesn’t suffer from – availability of fuel.

Wind & solar are intermittent generators. Solar panels can’t generate at night. Wind turbines need wind speeds to be within a certain range – not too low, not too high – just right.

Wind & solar are often not generating at full capacity – or even to generate at all. This problem isn’t common for fossil fuel generation. Fossil fuels are almost always available through natural gas grids or on site coal storage. Nuclear also rarely suffers from unavailable fuel.

economics

The final reason for capacity to not generate is economics.

The relative price of fuel and electricity change how fossil fuel capacity is dispatched. Today’s low natural gas price environment is the reason why coal capacity factors have been dropping.

Here renewables come out way ahead of fossil fuels. As renewable fuel is free renewables can generate electricity at a lower marginal cost than fossil fuels. Wind & solar almost always take priority over fossil fuel generation.

typical capacity factors

The capacity factor wraps up and quantifies all of the factors discussed above. Table 1 gives us quite a bit of insight into the relative value of different electricity generating technologies. The capacity factor for natural gas is roughly twice as high as solar PV.

We could conclude that 1 MW of natural gas capacity is worth around twice as much as 1 MW of solar PV.

Table 1 – Annual capacity factors 2014-2016 US average

  Coal CCGT Wind Solar PV Nuclear
Annual Capacity Factor 56% 53% 33% 26% 92%

how useful is the capacity factor?

The capacity factor is not a perfect measurement. Taking the average of anything loses information – capacity factor is no different.

Two plants operating in quite different ways can have the same capacity factor. A plant that operated 50% for the entire year and a plant that generated for half of the year at full capacity will both have an identical capacity factor.

The capacity factor loses information about the time of energy generation. The time of generation & demand is a fundamental in any energy system. Generation during a peak can be a lot more valuable to the world than generation at other times. Because of the nature of dispatchable generation it is more likely to be running during a peak.

Thanks for reading!

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