Quantifying Capacity Credit

This post proposes a method of characterising the “Capacity Credit” of renewable electricity generation methods, covering both the credit of the existing generators, and how the credit will increase with additional generators.

Solar power is a good way to introduce the issues involved, as the “Law of Diminishing Returns” is quite well known for this method of electricity generation. In hot sunny regions (such as South Australia), with peak demand in summer heatwaves, the early solar PV generators are more effective in reducing peak demand than later additions because the early generators push the time of peak demand towards dusk. Thus, capacity credit for solar PV cannot be represented by a single number, it requires two numbers:

  • The credit for the existing generators
  • The rate of increase of credit with additional generators

Many specifications of capacity credit are somewhat misleading as they usually give a single number, expressed as a percentage of nameplate capacity, leaving some readers to assume (incorrectly) that this percentage applies to future additions.

Solar PV is difficult to quantify as it tends to be installed on domestic rooftops and is not metered by the transmission operator, hence this post will focus on wind power, using South Australian data from AEMO archives.


The following figure shows the daily peak demand (red curve) in South Australia for summer 2015/16, together with the daily peak demand (black curve) on non-wind sources of electricity:


The data shown above provides some samples of the random distribution of the reduction, due to existing (in 2015/16) wind power, in peak demand on conventional sources of electricity. Further work is required to deal with the problem of demand modulation due to weekends and holidays, before a number can be produced for existing wind power capacity credit in South Australia, but the figure above provides a ball-park estimate.


The following figure shows the daily peak demand on non-wind sources (black curve, repeated from above), together with the same quantity but with 50% more wind power (purple curve):


The most striking feature of the data shown in the figure above is the close similarity of the two curves, except at the minima, which are the windy days. To a good first approximation future wind farms in South Australia will not give any more reduction in peak demand on non-wind sources.


The existing wind power capacity in South Australia is sufficient to push the times of peak demand on non-wind sources to deep wind lulls, except on very windy days, which tend not to be very hot (high demand) days. Many of these deep wind lulls are in the late afternoon or early evening, so additional solar PV will have little impact.

In assessing the amount of conventional generation required to meet future peak demands the focus must be on the limited capacity credit of additional renewable generation, as well as on that of the existing generators.

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