Installed Capacity and Electricity Generation

Installed electricity capacity is the rated power output that generating equipment can produce under specified conditions; it is not the amount of electricity actually produced. Electricity generation is the electrical energy produced over a period, so it depends on both capacity and how intensively that capacity operates.

Capacity measures potential; generation measures output

Capacity is measured in megawatts (MW) or gigawatts (GW), whereas generation is measured in megawatt-hours (MWh), gigawatt-hours (GWh) or kilowatt-hours (kWh). Power describes the rate of producing energy; generation accumulates that output over time.

• A 100 MW plant operating continuously at its rated output for 24 hours would generate 2,400 MWh; lower output or fewer operating hours would reduce generation.
• The capacity factor is actual generation divided by the energy that could have been generated by operating at rated capacity throughout the same period.
• Thus, for a given period, generation equals installed capacity multiplied by the period's duration and the capacity factor, using consistent units.

Why generating capacity is not fully utilised

A plant's rated capacity does not guarantee that energy resources, equipment and grid conditions will allow it to operate continuously at that level.

• Resource availability limits production: solar output depends on sunlight, wind output on wind conditions, and hydropower on water availability.
• Maintenance and outages reduce operating time, while equipment limitations can require operation below rated output.
• Thermal plants require adequate fuel supplies; fuel shortages can reduce generation even when generating equipment is available.
• Electricity demand and dispatch influence plant operation: available plants may run below capacity when demand is low or other generators are selected to supply electricity.
• Transmission constraints and grid-security requirements can restrict the electricity that a plant is permitted to inject, including through renewable-energy curtailment.

Implications for clean-energy assessment

The share of installed capacity supplied by a technology need not equal its share of electricity generation. Technologies with different capacity factors produce different amounts of energy from the same installed MW.

• Adding renewable capacity can increase clean generation, but the actual contribution depends on resource conditions, grid access and utilisation.
• Storage, transmission and flexible generation help integrate variable renewable output and match electricity supply with demand.
• Climate mitigation should therefore be assessed using actual generation and associated emissions, not capacity additions alone.