What is capacity factor and why is it important for renewable energy?

Capacity factor is the ratio of actual energy output over a period to the maximum possible output if running at full capacity continuously. Typical values: solar PV 15-25%, onshore wind 25-35%, offshore wind 35-45%, nuclear 90%+. Capacity factor indicates resource availability and economic viability. Low capacity factor means more installed capacity is needed to generate a given amount of energy annually. It helps compare technologies and calculate levelized cost of energy (LCOE).