Capacity
The maximum amount of power the grid must be able to generate to meet peak demand.
Definition
Capacity is the total generating capability that must be available to reliably serve demand during the highest-usage periods of the year.
Detailed explanation
Grid operators require enough generation resources to meet peak demand plus a reserve margin, even if those resources only run a few hours a year. Commercial customers ultimately pay for their share of this standby capability through capacity charges, which are typically allocated based on each customer's usage during a small number of annual peak hours.
Why it matters
Because capacity costs are tied to your usage during peak windows, reducing consumption during those specific hours can lower this component of your bill for a full delivery year.
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