Capacity Credit

Capacity Credit (or value) is a term used in power system planning and is the proportion of rated capacity that’s considered “firm” when planning reserves and margins to meet peak demands. That basically means: how much of the rated capacity can be considered guaranteed to be there should it be needed? For conventional thermal plants the assumption would be 100%. For power sources such as wind, where there’s no guarantee that it’ll be windy at a time when you need to guarantee a certain amount of power, the value can be much lower.

Another way of looking at the meaning of capacity credit is to ask: how much other (“firm”) power generating capacity could we replace (or avoid building) if we build a certain capacity of, say, wind; while still maintaining system security? If the capacity credit of wind is 10%, that means that building 1 GW of wind capacity provides only the same contribution to firm system capacity as 100 MW of conventional power capacity.