What is Capacity Factor? A Beginner's Guide
One of the key inputs in a renewable energy project financial model is the capacity factor. It’s what tells you how much electricity will likely be generated by the project you’re modeling. The higher the capacity factor, the more electricity the power plant generates. In this blog post, we’ll cover a fundamental question for renewable energy projects - what is capacity factor? We’ll also explore why capacity factor is important, why capacity factors differ by power plant, and how to calculate a capacity factor.
Capacity Factor Overview
Capacity factor, or more accurately net capacity factor, is the ratio of the actual electricity output of a power plant over a period of time relative to the theoretical maximum electricity output of a power plant over a period of time. You can calculate the capacity factor for any power plant, whether the plant uses fuel or a renewable resource like the sun, water, or wind.
A blender making smoothies can be a helpful analogy when thinking about the question, what is capacity factor? Imagine a blender in January making smoothies every second of every day of January compared to the same blender making smoothies in February 50% of the time. Its capacity factor is the amount of smoothies made in both months compared to how many smoothies could have been made if the blender operated all the time.
Understanding Energy Capacity and Capacity Factor
Nameplate capacity, or energy capacity, is the theoretical maximum electricity output of a power plant. Let’s say you have a 4,000 megawatt (MW) nuclear power plant that generates 35,040,000 megawatt-hours (MWh). Its energy capacity is 4,000 MW and its capacity factor is 100% (35,040,000 MWh / (365 days * 24 hours/day * 4,000 MW).
Here’s another example. You own and operate a 200 MW wind project that generates 600,000 MWh. Its nameplate capacity, or energy capacity is 200 MW. The capacity factor of your 200 MW wind farm is therefore ~34% (600,000 MWh / (365 days * 24 hours/day * 200 MW).
Capacity Factor of a Power Plant
How does capacity factor affect electricity generation? Every power plant has a listed nameplate capacity indicating its theoretical maximum electricity output. The capacity factor indicates how often a power plant operates at peak efficiency. A power plant with a 100% capacity factor means the power plant is producing electricity at its full potential all the time.
According to the EIA, the average capacity factor for different power sources is as follows: a hydroelectric plant is 36-43%, a nuclear plant is 91-93%, a solar plant is 24-26%, and a wind plant is 32-35%, a coal plant is ~41-61% and a combined cycle gas plant is ~49-57%. Now you can likely see why the question, what is capacity factor? is crucial in a power plant’s economics. The lower the capacity factor, the less electricity that’s generated.
Types of Capacity Factor
The three types of capacity factors are the nameplate generation capacity, net summer generation capacity, and net winter generation capacity. A manufacturer determines the nameplate generation capacity and the theoretical maximum electricity output over some time period.
Net summer generation capacity and net winter generation capacity are exactly what you’d expect. Summer capacity is determined by performance tests between June 1 and September 30. Winter capacity is determined by performance testing between December 1 and February 28 per the Department of Energy.
How to Calculate Capacity Factor
Calculating a capacity factor is straightforward. Divide the annual generation of a power plant by the product of the number of days per year (365), hours per day (24), and the nameplate capacity (MW). The output is a percentage that tells you the capacity factor.
For example, let’s say we have a 300 MW solar project that generates 675,000 MWh. Its capacity factor would be ~26% (675,000 MWh / (365 days * 24 hours/day * 300 MW). What about a 500 MW hydro plant generating 1,750,000 MWh? Its capacity factor would be ~40% (1,750,000 MWh / (365 days * 24 hours/day * 500 MW).
Capacity Factors for Renewable and Nonrenewable Sources
EIA estimates the average capacity factor in renewable energy as follows: a hydroelectric plant is 36-43%, a nuclear plant is 91-93%, a solar plant is 24-26%, and a wind plant is ~32-35%, a coal plant is ~41-61% and a combined cycle gas plant is ~49-57%.
Except for hydroelectric and nuclear, capacity factors for renewable energy projects are lower than their fossil power plant counterparts. As solar and wind technology advances and battery energy storage systems are paired more regularly with solar and wind projects, it’s a safe bet capacity factors for renewable energy projects will increase over time.
Wind Power Capacity Factor & Intermittency
What is the average capacity factor for wind turbines? Per the EIA, a wind project’s average capacity factor is 32-35%. In other words, these projects can’t produce electricity 24/7/365 without a complimentary electricity source like a battery energy storage system. A high capacity factor for a wind project means that the project is regularly generating electricity at its full nameplate capacity.
Wind project siting is key to unlocking a high capacity factor to combat intermittency issues. Generally speaking, the best US wind resources are in the central part of the country and off of the coasts. The more the wind blows at high speeds, the fewer the intermittency problems, which generally result in a higher capacity factor.
Capacity Factor Solar
What is the capacity factor of a solar panel? Solar power's capacity factor is ~24-26% per the EIA. The capacity factor of a solar project is heavily influenced by the availability of sunlight. This translates to seeing a high percentage of installed US solar projects concentrated in the southwest US where sunlight availability isn’t an issue.
As the solar panel market matures, it’ll be interesting to see how technological advances, like bifacial panels and the incorporation of battery energy storage systems, impact the capacity factor. The thinking goes that with more access to sunlight (bifacial captures sunlight on both sides of the panel), the project will be able to generate electricity in more hours of the day.
Factors Affecting Capacity Factor
Technical constraints, economic reasons, and resource availability all affect the capacity factor of a power plant. Diving deeper, technical constraints include a plant’s design, its maintenance schedule, and equipment failures. Economic reasons include curtailment and plant idling where it may not make sense to generate electricity at certain times of the day and year.
Resource availability includes weather conditions where fuel isn’t available or the resource itself, the sun and wind, aren’t available. Scarcity of water, restricted fuel supplies, minimal sunshine, and low wind speeds are examples of a lack of resources available to the power plant.
Capacity Factor vs. Efficiency
Efficiency is the ratio of the output of electricity divided by the input of electricity multiplied by 100. Capacity factor is the actual electricity output over time divided by the maximum possible output of electricity. Capacity is about volume while efficiency is a ratio between the electricity input versus the electricity output.
Heat rate (thermal energy in divided by electrical energy out) is the inverse of efficiency. For example, a 100% efficiency means that 1 kWh of thermal energy produces 1 kWh of electrical energy. Capacity factor is the electrical energy output over time relative to the maximum electrical output over time. For example, a 100 MW solar plant generating 225,000 MWh has a ~26% capacity factor (225,000 MWh / (365 days * 24 hours/day * 100 MW).
Conclusion
Answering the question, What is capacity factor? involves quite a few moving pieces. One of the keys to understanding capacity factor is to take into account the energy capacity or nameplate capacity. Once you’ve got that down, calculating the capacity factor only requires the plant’s estimated electricity output. The types of capacity factors vary by the time of year, different generation sources, and location of the project. As electricity markets add more intermittent resources like solar and wind, power plant owners and grid operators will be even more sensitive to the capacity factors of their resources in their portfolios.
