Concept
The capacity factor (CF) is how much a plant actually produces over a period, as a fraction of what it would produce running at full output the whole time. It’s a number between 0 and 1.
Even with the equipment built and ready, a plant rarely runs flat out every hour: a wind farm only generates when the wind is blowing, and a chemical plant comes down for maintenance. The capacity factor keeps you realistic about how much an asset or process is actually online, instead of assuming it runs at full output all year.
Definition.
CF = actual output over a period / output if it ran at full capacity the whole periodOver a year, that’s the tonnes (or MWh) actually produced divided by what running at full output every hour of the year would give. It’s dimensionless, between 0 and 1.
A single capacity factor rolls up every reason a plant produces less than its full rating. The common ones:
How it drives the economics. A plant’s big fixed costs (the capital you borrowed to build it, annualized via the CRF, plus fixed operating costs) stay about the same whether it runs flat out or not. So when the capacity factor is below 100%, those fixed costs spread over fewer units, and the cost per unit goes up. The lower the capacity factor, the harder this bites: dropping from 90% to 45% roughly doubles the fixed-cost share of levelized cost. Costs that scale with output, like feedstock and most consumables, barely move per unit. It’s also why a capacity factor borrowed from one kind of plant doesn’t transfer to another: a continuous chemical plant might run near 90% , while a plant tied to a variable input like renewable power runs far lower.