Previously, we’ve defined how capacity factor relates the maximum potential energy output of a power plant to its actual output – over a specified period of time. In particular it gives the ratio of the actual energy output to the output had that power plant operated at full power for the whole time. It’s also possible to express this as the ratio of the average power output over the period to the rated (maximum) power output.
More useful than being aware of how capacity factor is defined, is to become comfortable manipulating the metric. In particular, to use it in simple calculations which illustrate its impact on key business and economic issues: costs, revenues and power prices for example.