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Glossary · Energy industry & energy transition

Firm capacity

Firm capacity security of supply Capacity value Capacity adequacy controllable generation storage flexibility residual load

Firm capacity is the portion of the output of a generation plant, a storage facility, a controllable load or an import option that is available with high probability to meet electricity demand in critical hours. It does not mean a theoretical maximum output. It is a contribution to security of supply that can be reliably counted. A power plant fleet with 1,000 megawatts of installed capacity therefore does not automatically deliver 1,000 megawatts of firm capacity. How much of it counts depends on the technology, the duration of the scarcity situation and the assessment method chosen.

Firm capacity is measured in watts, in practice usually in megawatts or gigawatts. It is therefore a measure of power, not a quantity of energy. A kilowatt hour indicates how much energy is generated or consumed over a period of time. A kilowatt indicates how much can flow at a given moment. For security of supply, what matters is whether enough power is available simultaneously in a tight hour. Over the course of a year, enough electricity can be generated while power is still lacking in individual hours.

The term is closely linked to resource adequacy and the capacity value. Resource adequacy concerns the question of whether the system as a whole has enough reliable capacity to cover demand, reserves and outages even under unfavourable conditions. The capacity value indicates statistically how much a single resource contributes to this. Firm capacity translates this assessment into a creditable capacity figure. In Germany, this figure has been called "reduced capacity" (reduzierte Leistung) in the capacity tenders since 2026.

Distinction from installed capacity

Installed capacity is the nameplate capacity of a plant or a fleet of plants. For a gas-fired power plant, this is the maximum electrical output when the plant is operational and fuel is available. For a wind turbine, it is the output at sufficiently strong wind. For photovoltaics, it is the output under standardised test conditions. Firm capacity answers a different question: How much of this is actually available in a critical hour with an acceptable probability? This depends on weather, fuel logistics, maintenance planning, grid connection, market signals, regulation and demand behaviour.

For controllable power plants, the firm share is usually close to the installed capacity. However, it is not completely certain even here. Power plants suffer unplanned outages, fuel can become scarce, cooling water can limit output, and emission restrictions can limit operating hours. A power plant therefore counts as firm capacity only to the extent that its availability in the situation concerned is technically plausible and secured organisationally or contractually.

For wind and photovoltaics, the firm contribution is usually significantly smaller than the installed capacity, because feed-in depends on the weather. This does not make these plants worthless. Over many hours they replace generation from other sources and reduce the residual load, that is, the demand that remains after deducting wind and solar power. For firm capacity, however, the rare, decisive scarcity hours are what count. During a Dunkelflaute (prolonged period of little wind and sunlight) lasting several days in winter, their contribution can be very low.

Storage, flexibility and duration of availability

For storage, power alone says little. A battery with 1 gigawatt of power and 2 gigawatt hours of storage capacity can deliver its full power for only about two hours. For firm capacity, energy content, discharge duration, efficiency and the probability that the storage is sufficiently charged before the critical hour therefore matter. For short bottlenecks or for shifting solar power into the evening, batteries are very valuable. In a scarcity lasting several days, their firm contribution is limited by their energy content.

Firm capacity is therefore always tied to a duration: For how many hours or days must the output be sustained? Without this information, the figure can be misleading. The German Electricity Security of Supply and Capacity Act (StromVKG) makes this explicit. For the tender of "long-term capacities" (Langzeitkapazitäten), plants must be able to supply electricity continuously for at least ten hours. Pumped storage, long-duration storage and hydrogen power plants are assessed differently from short-term storage for the same reason.

Flexibility on the demand side can also supplement or replace firm capacity. If industrial processes, heat pumps, electric vehicles or cooling systems reliably reduce their consumption in critical hours, less load needs to be covered. The effect is equivalent to additional generation. However, it only becomes firm capacity once the reduction is measurable, controllable, contractually secured and actually callable in an emergency. A load that could theoretically be shifted is not sufficient.

Assessment in rules and tenders

In the EU, the Electricity Market Regulation (EU) 2019/943 sets the framework (consolidated version of 16 July 2024). A Member State that uses a capacity mechanism needs a reliability standard. This sets the targeted level of security of supply. It is based at least on the value of lost load (Value of Lost Load) and the cost of new entry of the cheapest technology. It is expressed as expected energy not served (Expected Energy Not Served, EENS) and as loss of load expectation (Loss of Load Expectation, LOLE). How much firm capacity a system needs thus follows from a probability target and not from a fixed percentage of peak load.

In Germany, the Federal Network Agency (Bundesnetzagentur) prepares a report on electricity security of supply every two years pursuant to Sections 51 and 63 of the Energy Industry Act (EnWG). The current report was published in September 2025 and looks at developments up to 2035. The StromVKG builds on this. It entered into force in July 2026, and the EU Commission approved it under state aid law on 2 September 2026. In the tenders, the capacity offered is measured as reduced capacity: The nameplate capacity is multiplied by a technology-specific reduction factor laid down by law. The factor is intended to reflect the actual contribution of a plant to security of supply.

In the first tender for long-term capacities (bid deadline 8 September 2026), 4,500 megawatts of reduced capacity were put out to tender. The maximum value was 244,000 euros per megawatt of reduced capacity per year. According to the Federal Network Agency, bids totalling around 5,160 megawatts of reduced capacity received an award. The bid values ranged between roughly 129,600 and 190,000 euros per megawatt per year. The awards were published on 3 November 2026. For the successful bidders, this marks the start of an obligation to build the plants and keep them available over the commitment period. These figures describe creditable capacity, not installed capacity.

Why the term matters in the electricity system

In the electricity system, supply and demand must match at every moment. Generation, storage discharge, imports and consumption reduction must cover demand including grid losses and reserves. An annual balance does not guarantee this. For planning, hours with high load, little wind and solar power, constrained grids and possible power plant outages are what count. With more wind and solar power, the sources of firm capacity change: besides controllable power plants, storage, imports, grid expansion and flexible demand will count more in future. The quantity itself remains necessary.

The term also has an economic side. In a pure energy market, plants earn money mainly from kilowatt hours sold. A resource that runs rarely but is indispensable in scarcity hours has few full-load hours and uncertain revenues. This raises the question of how firm capacity is financed. Possible answers are capacity markets, strategic reserves, the grid reserve, tenders for controllable capacities or hedging products. They differ in who procures, who bears the costs and when the capacity may be deployed. Transmission system operators secure system operation in the short term. Legislators and regulatory authorities determine which reserves exist and which scarcity prices are permitted.

Typical misunderstandings

  • Installed renewable capacity is not firm capacity. A large amount of solar capacity delivers large quantities of energy during the day in summer. It contributes hardly anything to the winter evening peak. Conversely, a rarely used power plant can have a high capacity value if it can be reliably called upon in scarcity hours.

  • Import capacity is not automatically firm. It counts only if neighbouring countries have surplus capacity in the same situation and the lines are available. In large-scale weather situations, several countries often have a high residual load at the same time. The EU regulation therefore in principle opens capacity mechanisms to providers from other Member States, but only under conditions. The first German tender for long-term capacities was aimed at additional plants in Germany.

  • Firm capacity is not the same as baseload. Baseload refers to a relatively constant minimum consumption or to power plants designed for continuous operation. Firm capacity describes availability in critical situations. A resource can provide it without running constantly. Conversely, a continuously running plant is not firm if it can fail in critical hours.

  • Reserve is not the same as firm capacity. Reserve capacity such as balancing reserve compensates for forecast errors and outages in the short term and is held in the balance in addition to load. Grid and capacity reserves cover special situations. Reserves are part of safeguarding supply, but they do not answer the long-term question of resource adequacy.

Limits of the term

A figure for firm capacity always depends on assumptions: on the reliability target, the weather years, the duration of scarcity, the outage statistics, the situation in neighbouring countries and which other resources are already in the system. The capacity value of an additional battery or solar plant, for example, falls if many similar plants are already present. Figures from different studies or legal frameworks are therefore comparable only if the method is known. Firm capacity also says nothing about annual electricity volume, costs, emissions or grid bottlenecks. For a robust assessment, capacity contribution, energy quantity, duration of deployment, location, grid situation and institutional safeguards must be considered together.

Sources

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Edited by eCMS on 12.11.2026 05:05

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.