Power Generation Efficiency, Fuel & Capacity Factor

In power generation terms, we’ve already described efficiency as the ratio of the electricity produced by a power plant (“energy out”) to that of the primary energy going into it (i.e. the energy content of the fuel).

In the video below, we explore power generation further, including its impact on both the very large (country) scale and its variation between different power plant types. We’ll highlight the different impacts of efficiency between power plants which have to buy their fuel and those that get it for “free” (solar or wind farms, for example).

There’s also a clarification on one common source of confusion: the difference between “efficiency” and “capacity factor”.

After the video are some references which make useful further reading. Then we recommend you spend some time exploring another simple online calculator. This – in combination with the provided questions in the next section – will help illustrate some of the points made.


(1) For more data on typical power plant efficiencies in practice, here’s an example study: click

(2) Another example of such data, along with a link to a document describing how the US government define “primary energy” for renewable sources in terms of the amount of fossil fuel resources they substitute, can be found here.

(3) When referring to thermal power generation (where fuel energy is changed to heat and then to electricity) you will often here the term “heat rate” used rather than efficiency. Heat rate refers to the amount of primary energy required to generate one kWh of electricity output, so is expressed in energy terms (commonly Btu – British thermal units) rather than as a percentage. It is succinctly explained here.