[4][better source needed] The output of a variable renewable energy (VRE) plant depends on the state of an uncontrolled natural resource (usually the sun or wind), therefore a mechanically and electrically sound VRE plant might not be able to generate at the rated capacity (neither at the nameplate, nor at the capacity factor level) when needed,[1] so its CC is much lower than 100%.
The capacity credit is useful for a rough estimate of the firm power a system with weather-dependent generation can reliably provide.
Ensslin et al.[6]) wind power capacity credit of 5%, 20 gigawatts (GW) worth of wind power needs to be added to the system in order to permanently retire a 1 GW fossil fuel plant while keeping the electrical grid reliability at the same level.
Greater geographical diversity of the VRE installations improves the capacity credit value, assuming a grid that can carry all necessary load.
[18] The California Public Utilities Commission orders of 2021 and 2023 intend to add by 2035 additional renewable generation capacity with NQC of 15.5 GW and nameplate capacity of 85 GW,[19] implying planned NQC for renewables (a combination of solar and wind), combined with geothermal, batteries, long-term storage, and demand response to be 15.5/85 = 18%.