The rated capacity of a generation unit, also known as the maximum power rating, defines the maximum power in megawatts that the unit is designed to provide to the grid. While the unit may be able to produce electricity at a higher level, it will reduce its life in doing so.
Many types of generation units can be operated at levels well below their rated capacity or rated output. For example, an operator may have a 300 MW rated unit but only needs 200 MW at a certain point in time. So the unit is operated at 200 MW, even though it could actually produce 300 MW. Most units do have a minimum operating level below which it is uneconomic to operate. And certain types of units such as nuclear power plants are most commonly operated at a steady level near the rated capacity.