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The capacity factor of electricity generating plant is simply the energy produced in a given period of time divided by the energy which would be produced in the same period of time if the plant ran at full power throughout the period. For example, a coal fired power station with an output of 1000 MW is theoretically capable of producing 8760 GWh during a year. In practice, few power stations operate at a 100% load factor and the average for coal and nuclear plant is around 70-75%. The 1000 MW power station will therefore produce, typically, around 6000 GWh in a year.

The figures for thermal plant take into account the mechanical availability of the plant as well as its particular operating characteristics. In the case of wind plant, the variability of wind means that capacity factors -- which depend on wind speed as well as turbine rating -- usually range between 15 and 45%. The discussion in this article is focused on the capacity factors achievable by wind turbines with 100% availability. In practice, well engineered wind turbines have availabilities well over 90% and this must be taken into account when data are required for performance assessments.

The term "load factor" is synonymous with capacity factor and the term "full load hours" which is also used frequently, particularly in Denmark and Germany, simply means the equivalent number of hours a plant would have to run at rated output in order to deliver the annual energy. This should not be confused with the number of hours that a wind turbine actually delivers rated power which is usually of the order of 10-15% of the total -- depending on the rating.