Capacity factor is an important economic and planning concept, but it has no more impact on delivered system reliability than the rate you pay.
"Electric system reliability is a measure of the system’s adequacy to meet the electricity needs of customers. It is a term used by electric system planners and operators to measure aggregate system conditions, and as an aggregate measure, it generally applies to entire service territories or control regions. As such, the reliability of the electric system depends on the reliability of that system’s component parts, including, for example, power plants, transmission lines, substations, and distribution feeder lines. To help ensure a reliable system, planners and operators prefer having as much redundancy in these components as can be justified economically." pg. 2-1
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Problems in system operational reliability can usually be classified as faults and failures. Faults are caused by external events, such as tree contact, animal contact, lightning, automobile accidents, or vandalism. Failures are caused by an equipment malfunction or human error not linked to any external influence.
Both faults and failures can cause outages. These outages can be short, lasting less than 15 seconds and quickly resolved by automatic switching equipment. When a fault or a failure results in a longer outage, it typically involves damage to equipment such as a transformer that must be repaired or replaced before service can be restored. The time required for such remedies can range from hours to days or weeks. Faults and failures, rather than capacity deficiencies, are the causes of most outages. Outages created by faults and failures in generation are rare. While transmission faults are somewhat more common, 94% of all power outages are caused by faults and failures in the distribution system (Arthur D. Little, Inc. 2000).
...In general, distributed generation can increase the system adequacy by increasing the variety of generating technologies, increasing the number of generators, reducing the size of generators, reducing the distance between the generators and the loads, and reducing the loading on distribution and transmission lines. pg 2-2, 2-3
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DG can add to supply diversity and thus lead to improvements in overall system adequacy. DG’s contribution is often assessed by comparing the DG solution to the traditional solution. In this traditional comparison, emphasis is often placed upon the reliability of the DG system itself, and the argument is sometimes made that the DG capacity cannot be counted because it is not 100% reliable. However, there are two other factors that must be taken into consideration for this comparison to be useful. First, multiple DG units provide an element of diversity that has an improved reliability compared to a single unit, and second, the traditional alternatives are also not 100% reliable.
Multiple analyses have shown that a distributed network of smaller sources provides a greater level of adequacy than a centralized system with fewer large sources, reducing both the magnitude and duration of failures. However, it should also be noted that a single stand-alone distributed unit without grid backup will provide a significantly lower level of adequacy (Apt and Morgan 2005). pg 2-6
THE POTENTIAL BENEFITS OF DISTRIBUTED GENERATION AND RATE-RELATED ISSUES THAT MAY IMPEDE ITS EXPANSION
A STUDY PURSUANT TO SECTION 1817 OF THE ENERGY POLICY ACT OF 2005
June 2007
U.S. Department of Energy
A non-copyrighted government report in the public domain.