Capacity refers to the maximum amount of power available from an electric resource or the maximum capability of an electric device to transmit power. There are a variety of uses of the word capacity in the electric grid:
Nameplate capacity for a generation resource is its maximum output, measured in megawatts (MW). The nameplate capacity is based on the manufacturer’s determination of the maximum megawatt output a generator can produce without exceeding design limits.
Demand resources are measured by their capacity to reduce demand in MW.
Reliability capacity refers to the amount of capacity in MW that a supply resource (generation, demand response, energy efficiency, or storage) can reliably provide during system peak demand periods. Often just called “capacity” this is a product that is traded in wholesale energy markets. Some Independent System Operators (ISOs) facilitate capacity markets where market participants can buy and sell capacity to fulfill their obligations to ensure there is sufficient capacity to serve forecast loads.
Component capacity, measured in kVA, is the maximum amount of electricity that an electrical component can safely transmit. Examples of key component capacities in an electric grid include transmission lines, distribution lines, transformers, and other line equipment.