After publishing some recent reports on US power capacity additions and forecasts, one of our readers pushed for more attention on how capacity factors are changing as well as capacity. For those of you new to the topic, here’s a brief definition of capacity factor from the US Energy Information Administration (EIA):
“The ratio of the electrical energy produced by a generating unit for the period of time considered to the electrical energy that could have been produced at continuous full power operation during the same period.”
Well, that’s a mouthful.
Not clear? Here’s another attempt at explaining it:
“The net capacity factor is the unitless ratio of an actual electrical energy output over a given period of time to the maximum possible electrical energy output over that period”
Yes, Wikipedia does it better. But that still may be a hard thing to understand. Consider a solar power plant rated at 100 megawatts (MW) of capacity. It doesn’t pump out max electricity all the time, though. That means it doesn’t fulfill its maximum rated capacity 100% of the time. In the case of solar PV, its average capacity factor in the USA was 24.3% in 2019, according to the EIA. So, it really only achieved 24.3% of its max theoretical potential.
There’s a reason I don’t write much about capacity factor these days — it’s misleading to many people. For years, critics of renewables focused almost exclusively on capacity factor, not realizing or not acknowledging that it’s just one portion of the formula that ends up giving you the actual price of electricity from a certain power plant or type of power plant. Even with a far lower capacity factor than, say, a nuclear power plant (93.4% in 2019), solar and wind power plants are much cheaper when it comes to price per kilowatt-hour of electricity. Looking only at capacity factor would be like looking only at the fuel economy of a car and ignoring the car’s purchase price.
That said, changes in capacity factor over time seem notable to highlight since they do influence price trends, as well as emissions in the case of fossil fuel power plants. That’s why it was great to see the news that US coal capacity factor has declined from 67.1% in 2010 to 47.5% in 2019 (chart above).
That means that, aside from the significant drop in coal power capacity across the country in recent years (something we’ve documented repeatedly), the coal capacity that is still online is being utilized less and less.
Of course, when it comes down to it, another way to take capacity changes and capacity factor changes into account is to look at the end result — electricity generated. We also publish regular reports on electricity generation, and we’ve highlighted coal’s collapse in that regard from time to time since at least 2016. Here’s a piece on that from September: “Coal Dropped From 26.9% Of US Electricity To 17.7% In 2 Years — So Much For Trump Saving Coal.” I’m sure we’ll take another look at the long-term trends once we have full-year 2020 data from the US government. In the meantime, let us know anything else you’d like to see.