Energy Basics – Capacity Factor

All men & women are created equal. Unfortunately the same is not true for electricity generating capacity.
 
Capacity on it’s own is worthless – what counts the electricity generated (kWh) from that capacity (kW). If the distinction between kW and kWh is not clear this previous post will be useful.
 

Capacity factor is one way to quantify the value of capacity. It’s the actual electricity (kWh) generated as a percentage of the theoretical maximum (operation at maximum kW).

For example to calculate the capacity factor on an annual basis:
 
 

There are many reasons why capacity will not generate as much as it could.

Three major reasons 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 high challenges mean that fossil fuel plants need a lot of maintenance. The time when the plant is being maintained is time the capacity isn’t generating electricity.
 
Renewables plants need a lot less maintenance than a fossil fuel generator. No combustion means there is a lot less stress on equipment.
 
Availability of fuel
 
Yet while renewables come ahead in terms of maintenance, they fall behind due to a constraint that fossil fuel generation usually doesn’t suffer from – unavailability of fuel.
 
This is why renewables like wind & solar are classed as intermittent. Fuel is often not available meaning generation is often not possible.
 
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.
 
This means that wind & solar plants are often not able to generate 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.
 
Economics
 
The final reason for capacity to not generate is economics.
 
The relative price of energy and regulations 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 the fuel is free renewables can generate electricity at much 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 – Annual capacity factors (2014-2016 US average)

CoalCCGTWindSolar PVNuclear
Annual Capacity Factor56.13%53.40%33.63%26.30%92.17%

 

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.

How useful is the capacity factor?

Yet the capacity factor is not a perfect measure of how valuable capacity is. Taking the average of anything loses infomation – 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 infomation about the time of energy generation. The time of generation & demand is a crucial element in almost every 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.
 
This leads us to conclude that low capacity factor generation could be more valuable than higher capacity factor generation.  This is especially true for solar in many countries as a) the peak often occurs when the sun is down and b) all solar generation is coincident.
 
The solution to the intermittency problem of renewables is storage. Storage will allow intermittent generation to be used when it’s most valuable – not just whenever it happens to be windy or sunny.
 
Thanks for reading!

Leave a Reply

Your email address will not be published. Required fields are marked *